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BABY BOOMERS AND GEN X'ERS LESS PREPARED FOR RETIREMENT THAN THEIR ELDERS

More from the Emeritus Newsroom - A new study from The Pew Charitable Trusts, Retirement Security Across Generations: Are Americans Prepared for Their Golden Years?, examines the savings behavior of five age groups before the Great Recession. The research also explores how wealth losses during the recession affected each group’s retirement security by calculating replacement rates, or how much annual preretirement income households will have available to spend after retirement. It finds that early boomers (born 1946-1955) may be the last group on track to retire with enough savings to maintain their financial security through their golden years.

The research takes a comprehensive look at the net worth (assets minus debts), financial net worth (financial assets alone), and home equity of five generations: Depression babies, war babies, early boomers, late boomers, and Gen-Xers. The research shows that the youngest groups have less wealth than their older counterparts had at the same ages. And, although all these groups experienced wealth losses during the Great Recession, Gen-Xers took the hardest hit, losing almost half of their wealth. This lack of savings before the recession coupled with substantial losses in the downturn exposes younger groups to the real possibility of downward mobility in retirement. 

"Late boomers and Generation-Xers lost significant amounts of wealth during the Great Recession, eroding their already low levels of assets," said Erin Currier, who directs Pew’s economic mobility project. "As policymakers focus on Americans’ retirement security, particular consideration should be paid to how younger generations of workers can make up for these losses and prepare for the future."

Late boomers were born between 1956 and 1965, the end of the post-war “baby boom.” Generation-Xers were born between 1966 and 1975.

The research looks at wealth gains and losses from 1989 to 2010 for all five generational groups.

Key Findings:

Early boomers (born between 1946 and 1955) were approaching retirement in better financial shape than the cohorts that came before them. Benefitting from both the dot-com boom and the housing bubble, early boomers in their 50s and 60s had higher overall wealth, financial net worth, and home equity than Depression babies (born between 1926 and 1935) or war babies (born between 1936 and 1945) had at the same ages, putting them in a strong financial position for retirement. 

The picture of wealth accumulation and savings for Americans born after 1955 was more mixed. Gen-Xers (born between 1966 and 1975) had higher net worth than late boomers (born between 1956 and 1965) when both were in their 30s and 40s, but neither group had as much wealth as early boomers had at the same age. Similarly, late boomers had more wealth than early boomers when both were in their 40s and 50s, but neither had as much as did war babies.
The financial net worth of younger cohorts is more tenuous. Neither Gen-Xers nor late boomers were on track to exceed the financial position of the cohorts that immediately preceded them. In their 30s and 40s, Gen-Xers lagged behind late boomers by about $6,000 by this metric, and in their 40s and 50s, late boomers lagged behind early boomers by more than $5,000.

Both cohorts of baby boomers and the Gen-Xers have significantly lower asset-to-debt ratios than do the older groups. Over the last two decades, Depression and war babies have been shedding debt, while baby boomers and Gen-Xers have been accumulating it.  As of 2010, war babies’ asset levels were 27 times higher than their debts. In contrast, late boomers’ assets were about four times higher than their debts, and Gen-Xers’ assets were about double their debts.

All groups experienced wealth losses in the Great Recession, but Gen-Xers took the hardest hit. Both early and late boomers were negatively affected by the recession at a critical point in their lives, losing 28 and 25 percent of their median net worth, respectively. From 2007 to 2010, however, Gen-Xers lost nearly half (45 percent) of their wealth totals, an average of about $33,000, reducing their already low levels.

Replacement rate analysis shows that the youngest cohorts will not have enough assets for a secure retirement. Early boomers may be the last cohort on track to retire with enough savings and assets to maintain their financial security through their golden years. Even after the recession, they had acquired enough savings and wealth to replace 70 to 80 percent of their preretirement income. Replacement rates have steadily declined across the cohorts studied, putting the youngest on shaky financial footing. At the median, Gen-Xers will have enough resources to replace only about half of their preretirement income; late boomers will replace about 60 percent.

Analysis for this report was conducted by John Gist, Research Professor of Public Policy at George Washington University. The data used in the report are from the Survey of Consumer Finances, collected by the Federal Reserve Board, and the Panel Study of Income Dynamics, conducted by the University of Michigan.

Full text of Pew press release, click here - 05/21/2013

AMERICANS INCREASINGLY WORRIED ABOUT ECONOMY AND WASHINGTON GRIDLOCK

While the American middle class is still optimistic about getting ahead, they have become increasingly fearful that they may fall behind, according to poll results released today by The Allstate Corporation (NYSE: ALL) and National Journal.

The 16th quarterly Allstate-National Journal Heartland Monitor Poll focuses on the American middle class and seeks to uncover important insights about how this cornerstone economic group perceives the future. The poll asks Americans to define what it means to be part of the middle class, based on income, financial security, education and lifestyle.  Unsurprisingly, many Americans (46 percent) identify as middle class and almost all Americans (85 percent) consider themselves a part of an expanded definition of being middle class that includes upper middle class (12 percent), and lower middle class (26 percent).

The most recent Heartland Monitor Poll also identifies renewed concern about the country’s recovery and an increase in skepticism toward major political and business institutions. Specifically, the mood of the country has worsened with only 29 percent of respondents believing the U.S. is headed in the “right direction,” a considerable decline from a three-year high of 41 percent recorded in November 2012. Democrats’ optimism has decreased by 23 points to 54 percent in the most recent data, while just 32 percent of the middle class feel the country is headed in the right direction.

“Over the last four years, Americans’ views in this poll have been consistently right about the economy. Today, they are sounding the alarm bell that the economy is not on track for sustainable growth. More affordable college education, job creation and stability are seen as key priorities,” said Thomas J. Wilson, chairman, president and chief executive officer of Allstate. “The blame is spread wide and far, from politicians to business leaders. Americans are crying out for leaders to work together to create a path to economic prosperity. We should listen and act now.”

Heartland Monitor XVI reveals that public opinion is narrowly balanced between hopes of economic improvement and fears about falling behind. Nearly three-in-five middle class Americans (59 percent) say they are concerned about falling out of their economic class. The attributes Americans have historically seen as safeguards for middle class families such as educational attainment and responsible financial planning are now considered by many to be unrealistic or only attainable by the upper class.  At the same time, Americans remain optimistic about the potential to move up the economic ladder at some point in the future; this is especially true among Millennials, African Americans and Hispanics, whom view economic opportunity as being on the horizon. 

The new poll shows that there is now a sense that the term ‘middle class’ has now been redefined to mean not falling behind, rather than upward mobility and material possessions. Americans mostly blame decisions made by political leaders and major business institutions over the past few decades for wages falling behind living expenses. In fact, Americans believe the government and private sector (local business excluded) are actually making the economic situation worse for the middle class. The latest Heartland Monitor shows that 64 percent of Americans believe Congress has made things worse for the middle class, while a mere 8 percent believe legislators are making things better. It’s not much better in the private sector, 55 percent of Americans think major financial institutions are making things worse and 54 percent of Americans believe CEOs of major U.S. corporations are hurting the economy as well.

Americans are clear with their prescriptions for policymakers with more than half (55 percent) preferring lawmakers to take an approach that invests in long-term job planning and growth in favor of initiatives that temporarily alleviates day-to-day expenses (38 percent). Among a list of policy preferences favored by Americans as a prescription for improving the middle class, improving access to and lowering the cost of higher education ranked as the most important (38 percent). Although most Americans still consider a college education to be an important hallmark of middle-class status, many now feel it is affordable only for the upper class (49 percent).

“Americans still believe they can reach for the stars—but are increasingly concerned that they are standing on a trap door as they do,” said Ronald Brownstein, editorial director for National Journal.  “The survey suggests that after years of economic turmoil, most U.S. families now believe the most valuable, and elusive, possession in American life is not any tangible acquisition, like a house or a car, but rather economic security. Even while capturing the durability of the belief that individuals can better their circumstances, these results also pointedly remind us how much economic anxiety and political alienation still shadows American life, even after the darkest clouds of the Great Recession have lifted.”

Key findings from the 16th Allstate-National Journal Heartland Monitor Poll (PDF) include:

1. Who is the middle class?  A broad definition includes nearly everyone, and a more narrowly defined grouping includes a diverse mix of incomes and socioeconomic backgrounds.

• 46% of Americans truly considers themselves “middle class,” placing themselves on the middle rung of a five-tier economic class system which includes upper class, upper middle, middle class, lower middle, and lower class.

• 85% of American adults consider themselves as part of an expanded definition of middle class.  One in four (26%) identifies as lower middle class, while 12% calls themselves upper middle class. 

• 12% of Americans consider themselves to be lower class, 2% identify as upper class.

• Americans believe a typical middle-class family makes between $60k and $65k per year – actual estimates indicate the median income for an average family of four is $68,274. 

2. The American middle class is anxious and in flux.  While many dream of upward mobility, most are concerned about falling out of their economic class. 

• 59% of Americans say they’re concerned about falling out of their economic class over the next few years

• More than half (52%) of Americans say the biggest risk factor for falling out of their economic status is losing a job or income source

• 55% of middle-class Americans had parents who were not in the middle class, and more than half (51%) have been outside the middle class in their own lifetime.  Overall, there’s been a clear upward tack in economic status.  There are more Americans who have moved up into the middle class from the previous generation or within their own lifetimes than slid down the ladder.

• 42% of middle-class parents with children under 18 years believe their kids will be upper middle or upper class when they grow up.

3. Americans believe the key to staying in or moving into the middle class is by attaining a higher level of education, but find it increasingly unaffordable.

• 50% of all Americans and 51% of the middle class consider higher education to be the most effective way to protect and earn middle-class standing.

• While many middle-class Americans face concerns about their ability to pay for a college education for their children, it follows that Americans are turning to elected officials for a solution to this widening gap in access to higher education. 

4. For many, being middle class now means financial security rather than material items or financial growth, and it means keeping from falling behind in an uncertain and challenging economy.

• A solid majority (54%) of Americans believes that being middle class today means keeping up with expenses and holding a steady job while not falling behind or taking on too much debt. Just 43% think that middle class means having the opportunity for financial and professional growth, buying a home, and saving and investing for the future.

• Seen as most “out of reach” for the middle class are paying for a child’s college education, retiring comfortably, and having enough money to weather a health or income emergency.  At least 40% of middle class Americans believe these things are only realistic for the upper class.

• One-quarter to one-third of middle class Americans believe that yearly vacations, regular income increases, affording quality healthcare, and having job security are only manageable for the upper class.
  
  

5. Americans want policymakers and businesses to focus on actions that increase economic opportunities, create jobs, and make education attainable and affordable.  However, major institutions are seen as hurting, not helping, the American middle class.

• 55% of Americans prefer a governing approach that seeks to increase economic growth, job creation, and opportunity over an approach that makes daily expenses, health care, education, and retirement more affordable (38%).

• Americans believe that the country’s political leadership is making things worse for the middle class.

• 64% believe Congress is making things worse, and 8% think it’s making things better

• 45% believe President Obama is making things worse, and 36% believe he is making things better.

• 54% of Americans believe CEOs of major U.S. corporations are making things worse

• 55% say major financial institutions are making things worse

6. After a momentary upswing in national optimism and goodwill, Americans have renewed concerns about the economy and about the nation’s political leadership.

• The mood of the country has fallen to 29% “right direction,” down from a three-year high of 41% in our late-November survey.

• Democrats’ optimism has decreased by more than 20 points, from 77% in our last poll to 54% in most recent data. 

• Among the middle class, just 32% think things are headed in the right direction. Full text of findings, click here. 04/28/2013

FEW SENIORS CONFIDENT ABOUT FINANCES IN RETIREMENT

More from the Emeritus Newsroom - Only 13% of seniors are confident of their financial condition by the time they retire. The finding comes in the latest survey from the Employee Benefit Research Institute.

Some of the findings of the 2013 survey include:
·
The percentage of workers confident about having enough money for a comfortable retirement is essentially unchanged from the record lows observed in 2011. While more than half express some level of confidence (13 per- cent are very confident and 38 percent are somewhat confident), 28 percent are not at all confident (up from 23 per- cent in 2012 but statistically equivalent to 27 percent in 2011), and 21 percent are not too confident.
·
Retiree confidence in having a financially secure retirement is also unchanged, with18 percent very confident and 14 percent not at all confident.
·
One reason that retirement confidence has remained low despite a brightening economic outlook may be that some workers may be waking up to a realization of just how much they may need to save. Asked how much they believe they will need to save to achieve a financially secure retirement, a striking number of workers cite large savings targets: 20 percent say they need to save between 20 and 29 percent of their income and nearly
one-quarter (23 percent) indicate they need to save 30 percent or more.
·
Aggressive as those savings targets appear to be, they may not be based on a careful analysis of their individual circumstances. Only 46 percent report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement.
·
Retirement savings may be taking a back seat to more immediate financial concerns: Just 2 percent of workers and 4 percent of retirees identify saving or planning for retirement as the most pressing financial issue facing most Americans today. Both workers and retirees are most likely to identify job uncertainty (30 percent of workers and 27 percent of retirees) and making ends meet (12 percent each).
·
Cost of living and day-to-day expenses head the list of reasons why workers do not contribute (or contribute more)
to their employer’s plan, with 41 percent of eligible workers citing this factor.
·
Debt may be another factor standing in the way; 55 percent of workers and 39 percent of retirees report having a problem with their level of debt, and only half (50 percent of workers and 52 percent of retirees) say they could definitely come up with $2,000 if an unexpected need arose within the next month.
·
Worker confidence in the affordability of various aspects of retirement continues to decline. In particular, increases are seen in the percentage of workers not at all confident about their ability topay for basic expenses (16 percent, up from 12 percent in 2011), medical expenses (29 percent, up from 24 percent in 2012), and long-term care expenses (39 percent, up from 34 percent in 2012).
·
Just 23 percent of workers (and 28 percent of retirees) report they have obtained investment advice from a professional financial advisor who was paid through fees or commissions. Of these workers, 27 percent followed all of the advice, but more disregarded some of it and followed most (41 percent)or some (27 percent).

Full text of EBRI survey (36 pages PDF), click here - 04/27/2013

FEDERAL TRADE COMMISSION FORCES DEBT COLLECTORS TO PAY $800,000 TO CONSUMERS FOR FRAUDULENT PRACTICES

More from the Emeritus Newsroom - After allegedly misleading consumers into paying unnecessary fees and falsely threatening consumers with lawsuits, defendants in a debt collection operation have agreed to settle Federal Trade Commission charges.

The FTC alleged in its complaint that the defendants – a debt buyer and a debt collection law firm, both based in Mississippi – violated the FTC Act and the Fair Debt Collection Practices Act by deceptively charging consumers a fee for payments authorized by telephone.  According to the FTC, the defendants led consumers to believe that the fee was unavoidable when, in fact, those who paid by mail or online did not incur the fee.  The FTC also alleged that the companies violated the laws by falsely threatening to sue consumers as a means of getting them to pay.  A debt collector is prohibited by law from using false, deceptive, or misleading representations or tactics when collecting a debt.

Under the terms of the proposed settlement, the defendants will pay $799,958 in restitution for consumers.  The defendants also are barred from making any misrepresentations  when collecting a debt, including false claims that consumers must pay an extra fee when making payments on a debt or that they will be sued for not paying a debt.

According to the complaint, debt buyer Security Credit Services, LLC, and Jacob Law Group, PLLC have worked together since 2006 to collect debts nationwide.  Security Credit buys consumer debt accounts, and contracts with Jacob Law to collect on them.  The complaint alleges that Jacob Law called and pressured consumers to immediately make payments on their debts by authorizing electronic checks or credit or debit card payments over the phone.  Jacob Law allegedly told consumers they were required to pay an additional fee of $18.95 for this service, but routinely failed to mention that they could avoid the fee by mailing the payment or paying online.  Since 2008, the defendants have collected at least $799,958 in fees from consumers.

The FTC also alleged that Jacob Law Group implied that it would file lawsuits to collect the debts even when it did not intend to do so.

For consumer information about dealing with debt collectors, see Debt Collection.

The Commission vote authorizing the staff to file the complaint and approving the proposed consent decree was 4-0.  The FTC filed the complaint in the U.S. District Court for the Northern District of Georgia, Atlanta Division, on March 13, 2013, and has submitted the proposed consent decree to the court for approval.

Full text of FTC announcement, click here - 03/31/2013

INSURANCE GIANTS SETTLE LAWSUITS OVER NON PAYMENT OF DEATH CLAIMS

More from the Boston Globe, click here - Article from Life Health Pro, on initial probe, click here - Updated article from Life Health Pro, click here - 03/16/2013

JP MORGAN PAYS PRICE FOR LOSING $6.2 BILLION IN RISKY TRADING PRACTICES

More from the Voice of America - A new U.S. Senate report is sharply condemning the country's biggest bank, JPMorgan Chase, for its risky trading practices and lack of controls that resulted in a $6.2 billion trading loss last year.

Democratic Senator Carl Levin of Michigan, the chairman of the Senate Permanent Subcommittee on Investigations, which held a hearing yesterday on the bank's actions, summarized the findings of the 300-page report. The bank lost the money in its London office while making trades on securities known as derivatives, financial instruments that get their value from other assets.

"It exposes a derivative trading culture at JPMorgan that piled on risk, that hid losses, that disregarded risk limits, that manipulated risk models, that dodged oversight, and that misinformed the public," Levin said.

The legislator also said the scope of the bank's deceptions in hiding losses on the complex trades would make it difficult for Americans to have confidence in big banks.

"It is difficult to imagine how the American people can trust major Wall Street banks to prudently manage derivatives' risks when bank personnel can readily game or ignore the risk controls that are meant to prevent financial disaster in taxpayer bailouts," he said.

The Senate panel questioned key JPMorgan executives, including Ina Drew, the official who had overseen the trading office where the loss occurred. Drew worked at JPMorgan for 30 years but quit last year after the loss was disclosed. She told the lawmakers that her subordinates had misled her.

"Some members of the London team failed to value positions properly and in good faith and minimized purported and projected losses, and hid from me important information regarding the true risk of the book," she said.

JPMorgan's highly acclaimed chief executive, Jamie Dimon, at first called reports of the trading losses a "tempest in a teapot."

But several officials were ousted in the aftermath of the $6 billion loss, and the company on Thursday said it has "repeatedly acknowledged mistakes." The bank said its senior management "acted in good faith and never had any intent to mislead anyone."

Link to full text of Senate report, click here - Statement from Sen. Levin, click here - Statement from Sen. McCain, click here - Hearing video with text of testimony from witnesses, click here - 03/16/2013

TAX BILLS FOR RICH FAMILIES REACH 30 YEAR HIGHS

More from the Associated Press, click here - 03/03/3013

FUTURE RETIREES WORSE OFF THAN THEIR PARENTS

More from the Washington Post, click here - 02/17/2013

DEFAULT MORTGAGE SERVICING FIRM AGREES TO $120 MILLION SETTLEMENT IN ROBO-SIGNING SCANDAL

More from the Emeritus Newsroom -Lender Processing Services, Inc., (LPS) along with its subsidiaries, LPS Default Solutions and DocX, have agreed to pay a total of  $120 million to settle allegations that the Jacksonville-based company “robo-signed” documents and engaged in other improper conduct related to mortgage loan default servicing, according to Massachusetts Attorney General Martha Coakley.

AG Coakley joins 45 other attorneys general in the consent judgment, filed Thursday, January 31st, in Suffolk Superior Court, requiring LPS and its subsidiaries to reform their business practices and, if necessary, correct documents they executed to assist homeowners. LPS primarily provides technological support to banks and mortgage loan servicers. Under the terms of the settlement, LPS will pay close to $1.6 million in fees and costs to Massachusetts, which will be allocated towards enforcement costs and addressing the harm caused by the misconduct.

“Fabricating signatures, or robo-signing, real estate documents is a serious violation of state law and puts homeowners at risk of fraud,” AG Coakley said. “LPS has agreed to end this unauthorized action, reform its business practices, and correct any harm caused by the misconduct.”

In the settlement, LPS stipulates to important facts uncovered in the investigation, including the practice by DocX of robo-signing, or so-called “surrogate signing” – the signing of documents by an unauthorized person in the name of another and notarizing those documents as if they had been signed by the proper person, as well as other improprieties in the document execution and recordation or filing process.   

The consent judgment will require proper execution of documents and prohibit signature by unauthorized persons or those without first-hand knowledge of facts attested to in the documents, enhanced oversight of the default services provided, and a review of all third-party fees to ensure that the fees have been earned and are reasonable and accurate.  The settlement also accomplishes the following:

Once the judgment is entered by the courts, LPS will undertake a review of documents executed during the period of Jan. 1, 2008 to Dec. 31, 2010 to determine what documents, if any, need to be re-executed or corrected. If LPS is authorized to make the corrections, it will do so and will make periodic reports to the AG’s Office of the status of its review and/or modification of documents.

The following states joined Massachusetts in today’s settlement: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Mississippi, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.

Full text of Attorney General statement, click here - 02/02/2013

CONSUMER GROUP SAYS PREPAID BANKING CARDS IN 5 STATES ARE UNFAIR TO THE UNEMPLOYED

More from the Emeritus Newsroom - A report from the National Consumer Law Center claims workers in five states incur prepaid card fees unnecessarily as those states violate federal law and require use of the prepaid card, without offering the choice of direct deposit to the worker’s own account. Other states impose hurdles to signing up for direct deposit. This report details changes in fee schedules since the 2011 report and includes a new survey of direct deposit rates.
Most workers choose direct deposit to their own account when offered the choice. But states vary in how easy they make it to sign up for direct deposit:
 Among the 36 jurisdictions that use prepaid cards but also offer direct deposit, Minnesota has the highest direct deposit rate of 82%. Arizona’s is the lowest at 16%, and the median rate is 57%. Some states encourage direct deposit as the first choice. Others automatically enroll workers in the prepaid card, requiring them to go to extra effort to disenroll to select direct deposit.
 Five states (California, Indiana, Kansas, Maryland, and Nevada) violate federal law by requiring workers to receive benefits on the state vendor’s prepaid card. In California, Kansas and Maryland, workers can set up automatic transfers to their bank account, but only 21% to 24% do so, which can result in a delay of one to four days in receiving payment.
 Indiana is the only state to fail to offer direct deposit, checks, or even an automatic transfer from the prepaid card to the worker’s own account. Workers must use the prepaid card or do a manual transfer to their bank account after each deposit. Nevada is similar, though the state is looking at adding automatic transfer capability.

On the positive side of the report, the 2013 Survey of Unemployment Prepaid Cards found that many states have lowered fees on their UC prepaid cards:
 Overdraft fees are gone. U.S. Bank, the only bank that had overdraft fees in our last survey, has eliminated them. All nine of the bank’s unemployment cards now receive a positive rating.
 In Pennsylvania, the state projects that workers will save $5.2 million through
several improvements to the card program.
 Point-of-service fees are nearly gone and ATM fees are easier to avoid.
 We now rate 18 cards as “thumbs up” and only 3 as “thumbs down” (out of
42 cards). In 2011, 8 cards merited a positive rating and 16 were negative (out of 40 cards).
Even well-designed prepaid cards impose costs on workers, though the price is likely lower than the cost of cashing paper checks. In California, which continues to have the best card in our survey, workers paid nearly $1.8 million in fees in the past year, not including ATM surcharges. Thus, offering workers the choice of direct deposit remains important even for prepaid cards with the fewest fees.

Links to full text of report and executive summary, click here -01/30/2013

MORE NEW RULES TO PROTECT HOMEOWNERS ANNOUNCED BY THE CONSUMER PROTECTION FINANCIAL BUREAU

More from the Emeritus Newsroom - Mortgage servicers are facing more pressure to be fair to homeowners who get behind with their payments. The Consumer Protection Financial Bureau has announced more new rules designed to protect homeowners from sloppy or fraudulent mortgage practices. The agency says people who are behind on their mortgages may not know what options they have and mortgage servicers may not give them the right information in a timely manner.

Here are some of the new rules.

Restrictions on dual tracking: Dual tracking is the term used when servicers move forward on a foreclosure at the same time they’re working with the borrower to avoid foreclosure. Many consumers report that they have discovered too late that they were foreclosed on by the same servicer they were working with to find an alternative. Under the new rules, servicers cannot begin foreclosure proceedings against you until your payments are 120 days behind.

Pursuing modifications and other loss mitigation: The dual tracking restrictions give you time to assess your situation and apply for a modification or other option that may be available to help you. If you apply within the 120-day window, the servicer cannot begin foreclosure until your application has been addressed. If you and your servicer come to an agreement on an option, the servicer cannot start foreclosure proceedings unless you don’t uphold your end of the agreement. Even if you apply after you’re already facing foreclosure, your servicer cannot complete the foreclosure while your application is pending so long as you submit it at least 38 days before the foreclosure sale is scheduled.

Early outreach when a borrower falls behind: If you become delinquent, the servicer has to make a good faith effort to reach out to you. The servicer also has to assign people to your case and make those people available by phone so you have a clear and consistent point of contact.

Warnings before interest rate adjustments: If you take out an adjustable rate mortgage, the servicer must notify you about the first interest rate adjustment at least seven months in advance of when you owe a payment at the adjusted interest rate. The servicer has to provide an estimate of the new interest rate and payment amount, alternatives available to you, and how to access a HUD-approved mortgage counselor. In addition, for the first interest rate adjustment, and all subsequent rate adjustments that result in a different payment amount, servicers must send you an additional advance notice telling you what your new payment will be.

Crediting payments in a timely manner: When you make a full payment, the servicer must credit it to your account as of that day. If you request a payoff statement in writing, the servicer has seven business days to issue the statement.

Error resolution: When there’s a mistake, you should be able to get it fixed in a timely manner. If you write to your servicer to address what you believe to be an error, the servicer should reply in a timely manner. The new rules set timelines and procedures for servicers to investigate and correct errors.

Force-placed insurance

Force-placed insurance is insurance that the servicer buys on the property when the borrower no longer has property insurance. Without insurance, whoever holds the mortgage would be at risk if the house were to be damaged or destroyed. But the borrower may actually be responsible for the costs of the force-placed insurance policy. This has led to unexpected or duplicate expenses for people who already have their own insurance policies. Under the new rules, servicers need a reasonable basis to believe borrowers lack their own insurance, and they must determine this on a case-by-case basis. The servicer also has to notify the borrower before purchasing the force-placed insurance policy and annually before renewing the policy.

These rules take effect early in 2014, along with three of the rules we issued last week. We’ve developed a page for the new rules where you can learn more about the new rules, including a detailed summary. Watch the page for new resources to help you understand the rules and their implications in the days to come.

Full text of CFPB press release, click here - 01/19/2013

PAY PAL CUTS TWO BIG DEALS TO CHALLENGE BANK CARDS

More from the Emeritus Newsroom - Several announcements from Pay Pal this week should have the banking community sweating the competition, as thousands of locations have been added as accepting the cards for payment. Yesterday, the company announced it teamed up with 23 new retailers.

They are, Famous Footwear, Dollar General, Mapco Express, RadioShack, Spartan Stores, Abercrombie & Fitch, Advance Auto Parts, Aéropostale, American Eagle Outfitters, Barnes & Noble, Foot Locker, Guitar Center, the Home Depot, Jamba Juice, JC Penney, Jos. A. Bank Clothiers, Nine West, Office Depot, Rooms To Go, Tiger Direct, Toys “R” Us and two additional partners to be named soon.

Then today, Pay Pal announced NCR, the business electronics giant formerly known as National Cash Register, will integrate PayPal mobile payment options into the recently announced NCR Mobile Pay application and NCR Aloha Online Ordering. With this integration, PayPal says it will be a payment option alongside credit or debit cards. Consumers will also be able to use the PayPal mobile application to locate, order-ahead and “check-in” at participating NCR Mobile Pay merchants to access the same functionality.

Two other aspects of this agreement are worth noting for consumers, according to the company.

Pay Pal merchants announcement, click here - Pay Pal and NCR announcement, click here - 01/15/2013

FEDERAL TRADE COMISSION NAILS DOMINICAN BASED MORTGAGE RELIEF SCAM THAT TARGETED HISPANICS IN U-S / CUSTOMERS GET REFUNDS

More from the Emeritus Newsroom - The Federal Trade Commission says it obtained a settlement order resolving charges against a nationwide scam operating from the Dominican Republic and banning the defendants from providing mortgage assistance relief. 

Pretending to be in Chicago, the Freedom Companies operation allegedly peddled fake mortgage assistance relief to financially distressed Spanish-speaking homeowners in the United States.  At the request of the FTC, a U.S. district court halted the operation in July.

The FTC settlement order bans the eight defendants, click here – David F. Preiner, Daniel Hungria, Freedom Companies Marketing, Inc., and five other companies controlled by Preiner and Hungria – from marketing any mortgage assistance relief products or services.  The settlement also prohibits the defendants from making misleading claims about any product, service, plan, or program that they market or advertise.

Filed in July 2012, the FTC’s complaint charged the defendants with violating the FTC Act and the Mortgage Assistance Relief Services Rule, known as the MARS Rule.  According to the complaint, the defendants promised to dramatically lower homeowners’ monthly mortgage payments in exchange for a hefty up front fee, and collected more than $2 million in fees in three years, but failed to provide homeowners with the promised services.  Speaking in Spanish and targeting homeowners behind in their payments or facing foreclosure, telemarketers empathized about the tough economy and claimed to provide information about federal mortgage assistance programs, according to the complaint.  In lengthy sales calls, the telemarketers falsely claimed to be affiliated with or approved by the consumers’ lenders or the federal government, “making sure to mention President Obama or the (federal) Making Home Affordable Program by name,” according to documents filed with the court.

The settlement also imposes a $2.39 million judgment, which reflects the full amount of consumer injury during the three years before the operation was shut down.  The judgment will be suspended due to the defendants’ inability to pay after they turn over the operation’s remaining $17,337 in assets.  If it is determined that the financial information the defendants gave the FTC was untruthful, the full amount of the judgment will become due.

Charging what they said was a one-time advance fee of $995 to $1,500, the callers allegedly falsely promised homeowners a mortgage modification in 30 to 90 days, often advising them to stop paying their lenders.

Homeowners who signed up received a batch of forms in the mail that required them to provide extensive personal and financial information and pay an advance fee, according to the complaint.  After paying the fee and not hearing further from the defendants for weeks afterward, some homeowners who managed to reach a live representative were told that the modification process was underway, but that they needed to pay up to several thousand dollars in additional fees.  In the end, the FTC alleged, few homeowners received a loan modification – or anything else of value from the defendants.  And what they did receive, they could have gotten for themselves for free.

In addition to Freedom Companies Marketing, Inc., Preiner, and Hungria, who was added as a defendant shortly after the complaint was filed, the settlement order also names:  Freedom Companies Lending, Inc.; Freedom Companies, Inc.; Grupo Marketing Dominicana; Freedom Information Services, Inc.; and Haiti Management, Inc.

The Commission has advice for consumers about managing their mortgages.  For more information see:  Mortgage Relief Scams in English, and Estafas de alivio para deudores hipotecarios in Spanish.

The Commission vote authorizing the staff to file the proposed consent agreement was 5-0.  The FTC filed the proposed consent agreement in the U.S. District Court for the Northern District of Illinois, Eastern Division, and the court granted the FTC’s request on December 26, 2012.

Full text of FTC announcement, click here - 01/09/2013

IN CALIFORNIA, BANKS FAVOR SHORT SALES MORE THAN FORECLOSURES / ALSO PAY FOR DISTRESSED HOMEOWNERS TO MOVE OUT

More from the LA Times, click here - 01/09/2013

BANK OF AMERICA AGREES TO REPAY FANNIE MAE OVER $10 BILLION FOR SELLING RISKY AND BAD LOANS

More from the Emeritus Newsroom - Fannie Mae today announced a comprehensive resolution with Bank of America, including a $10.3 billion agreement on existing and prospective repurchase requests on a specified population of loans and an additional payment of $1.3 billion to address servicing issues. Click here to read the Form 8-K.

The agreement covers current and future repurchase obligations related to loans with an outstanding unpaid principal balance of $297 billion as of November 30, 2012 that were originated between January 1, 2000 and December 31, 2008. As part of the agreement, Bank of America will make a cash payment to Fannie Mae of $3.55 billion. In addition, Bank of America will repurchase approximately 30,000 loans, which  have the potential to cause significant future losses to Fannie Mae, paying par plus accrued interest, for an additional approximately $6.75 billion, subject to certain adjustments.  As a result of this resolution, the amount of Fannie Mae’s outstanding repurchase requests will decrease substantially in the first quarter of 2013.

“A favorable resolution of this long-standing dispute between Fannie Mae and Bank of America is in the best interest of taxpayers,” said Bradley Lerman, Executive Vice President and General Counsel of Fannie Mae.  “Fannie Mae has diligently pursued repurchases on loans that did not meet our standards at the time of origination, and we are pleased to have reached an appropriate agreement to collect on these repurchase requests.”

Under the agreement, Bank of America remains liable for repurchase obligations arising out of specified excluded defects (for example, Fannie Mae Charter Act violations) and certain unresolved servicing and indemnification obligations. Bank of America also will be responsible for certain payment and other obligations related to mortgage insurance.

The comprehensive resolution also includes Fannie Mae’s approval of Bank of America’s request to transfer the servicing rights of approximately 941,000 loans from Bank of America to specialty servicers.  Fannie Mae’s approval of the transfer is consistent with its strategy to leverage the enhanced loss mitigation capabilities of specialty servicers to reduce credit losses on high risk loans. 

In addition to the $10.3 billion resolution and in connection with Fannie Mae’s approval of the servicing transfer, Bank of America will pay Fannie Mae $1.3 billion to resolve loan servicing compensatory fee obligations. 

Full text of Fannie Mae statement, click here - 01/07/2013

TEN BANKS PAY $8.5 BILLION TO SETTLE MORTGAGE FRAUD CASES

More from the LA Times, click here - 01/07/2013

S-E-C MISSES DEADLINE TO SET RULES FOR NEW "CROWDFUNDING LAW"

More from the NY Times, click here- 01/03/2013

SOCIAL SECURITY TAX REDUCTION EXPIRES

More from the Emeritus Newsroom - Congress managed to avoid the fiscal cliff, but failed to reinstate the temporary reduction in social security taxes, which increased effective yesterday. The 2% temporary reduction expired on January 1st, which translates to an increase of about $1,000 to an average wage earner making $50,000 a year.

01/02/2013

9,500 WORKERS AT BANKRUPT HAWKER BEECHCRAFT WILL GET PENSION PAY / PBGC STEPS IN TO SAVE ONE OF THREE PENSION PLANS

More from the Emeritus Newsroom - Facing the possibility that all three pension plans would be terminated in the Hawker Beechcraft bankruptcy, the Pension Benefit Guaranty Corporation has succeeded in saving one of them.

"Bankruptcy forces tough choices, but termination of pension plans doesn't have to be an automatic option," said J. Jioni Palmer, Senior Advisor and Director of Communications and Public Affairs. "When Hawkerm. Beechcraft first entered Chapter 11 the company intended to end all three of its pension plans. We immediately engaged Hawker's leadership to convince them that one or more of their plans were affordable".

"After our talks with Hawker, the company decided to keep its hourly plan. While PBGC is the nation's pension safety net, we only want to step in as a last resort. Hawker is expected to seek termination of its two remaining plans in bankruptcy court. Both are 49 percent funded and collectively have more than 9,500 participants. We're ready to pay retirement benefits up to the legal limit of about $56,000 a year for a 65-year-old. When this process started three pension plans could have been shut down, so this is a much better outcome", according to Palmer.

PBGC announcement, click here - 12/26/2012

FEDS AND CALIFORNIA AUTHORITIES NAIL TWO MORE FIRMS ACCUSED OF MORTGAGE MODIFICATION SCAMS

More from the Emeritus Newsroom - The Consumer Financial Protection Bureau today announced actions to halt two alleged mortgage loan modification scams it believes ripped-off thousands of struggling homeowners across the country. In total, these operations took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.  

“We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure,” said CFPB Director Richard Cordray. "We are especially concerned with those who misrepresent government programs or websites to divert distressed homeowners from needed assistance." 

At the request of the CFPB, U.S. District Court Judges in the State of California have ordered a halt to both operations, the Gordon Law Firm and the National Legal Help Center, and frozen their assets while the CFPB moves forward with the cases. The case involving the National Legal Help Center was initially referred to the CFPB by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and Treasury’s Office of Financial Stability, which have coordinated closely with the Bureau throughout the investigation. 

The CFPB is targeting loan modification operations that attempt to disguise their false promises of relief for struggling homeowners with claims that they are performing legal work or are a law firm. The Bureau is also particularly concerned with schemes that attract victims with false claims that they are endorsed by or represent the government. These tactics are used by mortgage relief scams to attract victims, add credibility to their schemes, or exploit certain legal exemptions for the practice of law. 

The CFPB complaints allege that the defendants in both cases violated the Dodd-Frank Act and Regulation O, formerly known as the Mortgage Assistance Relief Services Rule. These laws prohibit unfair, deceptive, or abusive acts or practices and protect distressed homeowners from mortgage relief scams.  

Violations of the law alleged in the CFPB’s complaints in both cases include:  

·      Illegally charged large upfront fees: It is against the law for mortgage relief providers to charge fees before services are provided. However, the defendants in both cases collected fees early on, typically ranging between $1,000 and $4,500 from each distressed homeowner, for services that rarely if ever materialized.  

·      Deceptively claimed to be affiliated with government agencies and/or programs: Defendants in both cases used deceptive language and mailings with government logos, letterhead, and/or marks to mislead consumers into believing that their mortgage relief services were sponsored by or associated with government agencies or programs.    

·      Misrepresented that they would secure loan modifications for consumers: Defendants misled consumers that the defendants were experienced negotiators who would substantially reduce mortgage payments, and that defendants would identify legal violations by consumers’ banks or mortgage companies to use as leverage in loan modification negotiations. However, it appears that defendants failed to provide meaningful relief for consumers. 

·      Instructed consumers to stop paying their mortgages and stop contacting their lenders: Financially distressed consumers were told to avoid interactions with their lenders and to stop mortgage payments because the defendants would provide relief, potentially putting the consumers unknowingly at risk of losing their homes and/or ruining their credit scores.   

The CFPB also alleges that, after pocketing thousands of dollars in illegal fees from one distressed homeowner after another, the defendants in both cases typically stopped returning consumers’ phone calls and emails. In the end, many consumers learned that the defendants had not contacted their lenders or obtained any meaningful relief for them. Ultimately, homeowners across the country lost thousands of dollars each and suffered significant economic injury, including losing their homes. 

Full text of Consumer Financial Protection Bureau statement and links to other legal documents and special information, click here - 12/11/2012

MORE EVIDENCE SHOWS CHINA TO BE LEADING ECONOMIC POWER BY 2030 / STUDY SHOWS U-S AND CHINA MUST SHARE PEACEFUL WORLD INFLUENCE

More from the Emeritus Newsroom - Reflecting more evidence of China's increasing world dominance, the National Intelligence Council says China and India will be fighting for top economic stature by 2030, which would leave the U-S in third.

According to the study, conducted by the Council, the delusion of power among countries will have dramatic impact by 2030. Asia will have surpassed North America and Europe combined in terms of global power, based upon GDP, population size, military spending, and technological investment. China alone will probably have the largest economy, surpassing that of the United States a few years before 2030. In a tectonic shift, the health of the global economy increasingly will be linked to how well the developing world does—more so than the traditional West. In addition to China, India, and Brazil, regional players such as Colombia, Indonesia, Nigeria, South  Africa, and Turkey will become especially important to the global economy. Meanwhile, the economies of Europe, Japan, and Russia are likely to continue their slow relative declines.The shift in national power may be overshadowed by an even more fundamental shift in the nature of power. Enabled by communications technologies,power will shift toward multifaceted and amorphous networks that will form to influence state and global actions. Those countries with some of the strongest fundamentals—GDP, population size, etc.—will not be able to punch their weight unless they also learn to operate in networks and coalitions in a multi polar world". The National Intelligence Council is made up of leaders in the U-S intelligence community, which issues a report every four years for the President.

The study has similar conclusions to that offered by the World Bank earlier this year, which found China likely to be the dominant economic power by 2030. Click here for World Bank study PDF download.

Full text of National Intelligence Council Report PDF download , click here - 12/10/2012

CORPORATE PROFITS REACH RECORD HIGHS IN 3D QTR. / WAGES CONTINUE DOWNWARD AS % of GDP

More from the Emeritus Newsroom - The Labor Department's Bureau of Economic Analysis paints a promising picture for corporate earnings in the third quarter of 2012 as wages decline. According to the BEA, profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $67.3 billion in the third quarter, compared with an increase of
$21.8 billion in the second quarter. Current-production cash flow (net cash flow with inventory
valuation adjustment) -- the internal funds available to corporations for investment -- increased $45.0
billion in the third quarter, compared with an increase of $6.0 billion in the second.
Taxes on corporate income increased $19.3 billion in the third quarter, in contrast to a decrease
of $10.3 billion in the second. Profits after tax with inventory valuation and capital consumption
adjustments increased $48.1 billion in the third quarter, compared with an increase of $31.9 billion in
the second. Dividends increased $11.3 billion compared with an increase of $20.4 billion; current production
undistributed profits increased $36.8 billion, compared with an increase of $11.6 billion.
Domestic profits of financial corporations increased $71.3 billion in the third quarter, in contrast
to a decrease of $39.7 billion in the second. Domestic profits of non financial corporations decreased
$1.0 billion in the third quarter, in contrast to an increase of $27.8 billion in the second.

Real gross domestic income (GDI), which measures the output of the economy as the costs
incurred and the incomes earned in the production of GDP, increased 1.7 percent in the third quarter, in
contrast to a decrease of 0.7 (revised) percent in the second. For a given quarter, the estimates of GDP
and GDI may differ for a variety of reasons, including the incorporation of largely independent source
data. However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of
change.

Federal Reserve statistics show wages are at the lowest level of GDP since 1975, just over 43%. The last time wages were even close to being half of GDP was 2001.

See graphic below of profit/wage gap from statistics released by the Federal Reserve Bank of St. Louis. Wages in Blue, corporate profits in red.

Full text and stats of BEA report, click here - Analysis by Center for American Progress, click here - 12/03/2012

UBS FINED $48 MILLION FOR LOSING $2.3 BILLION OF INVESTORS MONEY

More from Reuters, click here- 11/26/2012

FEDS WARN 12 MORTGAGE LENDERS AND BROKERS ABOUT MISLEADING MARKETING

More from the Emeritus Newsroom - Today the Consumer Financial Protection Bureau (CFPB), in partnership with the Federal Trade Commission (FTC), is issuing warning letters to approximately a dozen mortgage lenders and mortgage brokers advising them to clean up potentially misleading advertisements, particularly those targeted toward veterans and older Americans. The CFPB also announced it has begun formal investigations of six companies that it thinks may have committed more serious violations of the law.  

“Misrepresentations in mortgage products can deprive consumers of important information while making one of the biggest financial decisions of their lives,” said CFPB Director Richard Cordray.  "Baiting consumers with false ads to buy into mortgage products would be illegal. We will conduct a fair and rigorous investigation into these issues and will take appropriate action for any violations we find.” 

Today’s actions stem from a joint “sweep,” a review conducted  by the CFPB and the FTC of about 800 randomly selected mortgage-related ads across the country, including ads for mortgage loans, refinancing, and reverse mortgages. The agencies looked at public-facing ads in newspapers, on the Internet, and from mail solicitations; some came to the attention of the CFPB and the FTC from consumers who complained about them.  

The CFPB and the FTC were looking for potential violations of the 2011 Mortgage Acts and Practices Advertising Rule, which prohibits misleading claims concerning government affiliation, interest rates, fees, costs, payments associated with the loan, and the amount of cash or credit available to the consumer. The CFPB and the FTC share enforcement authority for the rule. Companies that the CFPB finds have violated prohibitions on misleading advertising could be subject to enforcement actions. 

The CFPB’s review generally focused on mortgage advertisements, particularly ads that targeted older Americans or veterans. The FTC, meanwhile, examined ads by home builders, realtors, and lead generators. The FTC is issuing their own warning letters to about a dozen companies and continuing with their own investigations of even more companies based on their findings. A copy of the FTC’s press release is available at: http://www.ftc.gov/opa/index.shtml.                                           

The sweep identified problems, such as: 

·         Potential misrepresentations about government affiliation: For example, some of the ads for mortgage products contained official-looking seals or logos, or have other characteristics that may be interpreted by consumers as indicating a government affiliation. 

·         Potentially inaccurate information about interest rates: For example, some ads promoted low rates that may have misled consumers about the terms of the product actually offered.  

·         Potentially misleading statements concerning the costs of reverse mortgages: For example, some ads for reverse mortgage products claimed that a consumer will have no payments in connection with the product, even though consumers with a reverse mortgage are commonly required to continue to make monthly or other periodic tax or insurance payments, and may risk default if the payments aren’t made. 

·         Potential misrepresentations about the amount of cash or credit available to a consumer: For example, some ads contained a mock check and/or suggested that a consumer has been pre-approved to receive a certain amount of money in connection with refinancing their mortgage or taking out a reverse mortgage, when a number of additional steps would customarily need to be completed before the consumer would qualify for the loan. 

The warning letters will advise the recipients that their ads may violate federal laws, and that they should review all their advertising. Opening an investigation is not an accusation of wrongdoing.  Investigations are fair and reasonable inquiries into a matter and may exonerate the subject of the investigation.   

An example of a warning letter from the CFPB to the mortgage advertisers that targeted older Americans can be found by clicking here.

An example of a warning letter from the CFPB to the mortgage advertisers that targeted veterans and servicemembers can be found by clicking here.

A blog from Assistant Director for the Office of Servicemember Affairs Holly Petraeus and Assistant Director for the Office for Older Americans Skip Humphrey further discussing today’s enforcement action is available by clicking here - 11/19/2012

AGENCY THAT BACKS PRIVATE EMPLOYER PENSIONS FACES MOST RED INK EVER

ore from the Emeritus Newsroom- The Pension Benefit Guaranty Corporation has issued its FY 2012 annual report, highlighting its efforts to preserve pensions at American Airlines and elsewhere, but also noting that its deficit increased to $34 billion, the largest deficit in PBGC's 38-year history.

"PBGC continues its work to preserve pensions, and to provide some of the best service anywhere," said PBGC Director Josh Gotbaum, "but continuing financial deficits will ultimately threaten its ability to pay benefits."

Gotbaum noted that the administration, like previous administrations, had proposed that Congress give PBGC's Board the ability to set premiums. "We continue to hope that PBGC can have the tools to set its own financial house in order, the way other government and private insurers do." PBGC's assets on hand are sufficient to pay pension benefits for years, but Gotbaum noted that measures to reduce the deficit will be less disruptive if initiated sooner rather than later.

Working to Preserve Pensions

PBGC always works to preserve pensions if possible. In FY 2012, the agency helped to protect 130,000 people in American Airlines' plans and tens of thousands more in other plans in ongoing bankruptcies. It also helped to protect 37,000 people in plans sponsored by companies that emerged from bankruptcy without terminating their plans, including the Great Atlantic & Pacific Tea Company (A&P), Lee Enterprises, and Houghton Mifflin Harcourt Publishing.

The annual report details other ways that PBGC works to help preserve and strengthen pensions.

Maintaining Quality Customer Service

Retirees who rely on PBGC for their pension benefits rate the agency as one of the best in government. PBGC has received a score of 89 on the American Customer Satisfaction Index (ACSI), more than 20 points above the government average (a score of 80 or higher is considered excellent, whether for a government agency or a private business). For retirees, the ease of applying for benefits and the reliability of monthly payments are of high importance, and they gave PBGC high ratings in both categories.

PBGC Insurance Programs

In 2012, PBGC paid nearly $5.5 billion in benefits to 887,000 retirees whose plans had failed; 614,000 future retirees will receive benefits when they become eligible. In 2012, the agency assumed responsibility for the benefits of 47,000 people in newly failed plans.

PBGC administers two pension insurance programs:

Single-Employer Insurance Program The deficit in the program for single-employer pension plans widened to $29.1 billion, up from $23.3 billion in 2011. In 2012, 155 underfunded pension plans terminated, with PBGC stepping in to cover their benefit promises. The program insures the pensions of nearly 33 million workers and retirees in about 24,000 ongoing plans sponsored by private-sector employers. The single-employer program's potential exposure to future pension losses from financially weak companies increased to about $295 billion from the $227 billion reported in fiscal year 2011.

Multiemployer Insurance Program The separate insurance program for multiemployer pension plans posted a deficit of more than $5.2 billion, compared with $2.8 billion last year. PBGC does not become trustee of multiemployer plans, but instead gives financial assistance to insolvent plans. In 2012 such assistance totaled $95 million to 49 plans. Overall, the multiemployer program insures the pensions of about 10 million workers and retirees in some 1,450 plans. PBGC estimates that, as of September 30, 2012, it is reasonably possible that multiemployer plans may require future financial assistance in the amount of $27 billion.

PBGC depends, not on taxpayer dollars, but on premiums paid by insured plans, investment income and assets from the recoveries of terminated plans.

About PBGC's Deficit

PBGC insures pension benefits of private pension plans covering nearly 43 million workers and retirees. As a result of plans that have already failed, the agency is already responsible for the retirement benefits of about 1.5 million people and its obligations ("liabilities") for these and other purposes totaled $119 billion, the bulk of which are benefits paid over many years. PBGC has $85 billion in assets on hand to cover these obligations. The deficit is the net of these amounts.

The 2012 deficit is the largest year-end deficit in PBGC's 38-year history. Factors that contributed to the worsening numbers included lower interest rates used to measure benefit payment obligations and anticipated increases in multiemployer financial assistance.

Premiums have been set by Congress at levels that have been insufficient to cover the benefits PBGC must pay. Administrations of both parties had proposed that PBGC's Board, like other public and private insurers, be allowed to set its own premiums based on the circumstances of the individual plans and their sponsors. Basing premiums on risk would encourage and reward companies who keep sound traditional pension plans. Under this approach the majority of companies that are financially sound would not have their premiums raised solely because of someone else's underfunding.

Recently, the Government Accountability Office suggested that Congress consider revising PBGC's premium structure to better reflect the agency's risk from individual plans and sponsors.

PBGC's financial statements are prepared in accordance with generally accepted accounting principles. The financial statements for fiscal year 2012 received an unqualified audit opinion for the 20th consecutive year. CliftonLarsonAllen LLP performed the audit under contract with the Corporation's Inspector General, who oversees the audit.

Full text of PBGC press release, click here - 11/18/2012

PATRIOTIC MILLIONAIRES SUPPORT TAX INCREASE

More from the Voice of America report, below - 11/15/2012

COLLEGE ENDOWMENTS TAKE BIG HIT DUE TO OVERSEAS INVESTMENTS

More from Reuters, click here - 10/26/2012

JUSTICE DEPARTMENT SUES BANK OF AMERICA FOR HIDING BAD RISK MORTGAGES IT SOLD TO FANNIE MAE AND FREDDIE MAC

More from Reuters, click here - 10/24/2012

HACKERS STEAL CUSTOMERS BANK CARD NUMBERS AT 63 BARNES AND NOBLE STORES

More from Associated Press, click here - 10/24/2012

REALTY TRAC SAYS 65% OF U-S HOUSING MARKETS WORSE OFF THAN BEFORE BUST

More from the Emeritus Newsroom - Real estate statistics authority Realty Trac today released an exclusive report on the health of local housing markets compared to four years ago. Titled “Election 2012 Housing Health Check,” the report found that 65 percent of local housing markets nationwide are worse off than four years ago based on an analysis of five key metrics impacting housing in more than 900 counties nationwide.

The key metrics analyzed were average home prices, unemployment, foreclosure inventory, foreclosure starts and share of distressed sales. In the 919 counties with data available for all five metrics, 580 (65 percent) showed at least three out of the five key metrics worse off than four years ago, while in 315 counties (35 percent) at least three of the five key metrics were better off than four years ago.

YOUNG AND OLDER WORKERS MORE FEARFUL ABOUT RETIREMENT BENEFITS

More from the Emeritus Newsroom - A new Pew Research survey finds that among adults between the ages of 36 and 40, 53% say they are either “not too” or “not at all” confident that their income and assets will last through retirement.  In contrast, only about a third (34%) of those ages 60 to 64 express similar concerns, as do a somewhat smaller share (27%) of those 18 to 22 years old.

 These findings stand in sharp contrast to the age pattern that emerged when the same question was asked in a Pew Research survey conducted in 2009. In that poll it was Baby Boomers between the ages of 51 and 55 who were the most concerned that their money would not last through their retirement years. Only 18% of those 36 to 40 years old were similarly worried they would fall short financially after they retire—a third of the share who express a similar concern today.

 A companion Pew Research analysis of data collected by the Federal Reserve Board in its Survey of Consumer Finances suggests a reason that retirement concerns have surged among adults in their late 30s and early 40s.

The median net worth of this group has fallen at a far greater rate than for any other age group both in the past 10 years and since the beginning of the Great Recession.

Led by declines in home value, the median wealth of adults ages 35 to 44 was 56% lower (in inflation-adjusted dollars) in 2010 that it had been for their same-aged counterparts in 2001— the steepest decline for any age group during that decade and more than double the rate of loss among those ages 55 to 64 (22%). (Household wealth is the sum of all assets, such as property cars, stocks and retirement accounts, minus the sum of all debts, such as mortgage, credit card debt and car loans.)

Full text of Pew survey, click here - 10/22/2012

BOOK FROM FORMER GOLDMAN SACHS INSIDER OUTLINES GREED AND DISDAIN TOWARD CLIENTS

More from Associated Press, click here - 10/22/2012

SOCIAL SECURITY BENFICIARIES GET 1.7% INCREASE

More from the Emeritus Newsroom - Monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 62 million Americans will increase 1.7 percent in 2013, the Social Security Administration announced today.

The 1.7 percent cost-of-living adjustment (COLA) will begin with benefits that more than 56 million Social Security beneficiaries receive in January 2013.  Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2012.

Some other changes that take effect in January of each year are based on the increase in average wages.  Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $113,700 from $110,100.  Of the estimated 163 million workers who will pay Social Security taxes in 2013, nearly 10 million will pay higher taxes as a result of the increase in the taxable maximum. 

Information about Medicare changes for 2013, when announced, will be available at www.Medicare.gov.  For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums.  

The Social Security Act provides for how the COLA is calculated.  To read more, please visit www.socialsecurity.gov/cola. 

Full text of SAA press release and link to fact sheet, click here - 10/16/2012

TD BANK SAYS IT MISPLACED PERSONAL DATA ON MORE THAN 270,000 CUSTOMERS

More from the Boston Herald, click here- 10/13/2012

HUNDREDS ARRESTED IN FED PROBE OF MORTGAGE REFI SCAMS

More from the Emeritus Newsroom - According to officials from several federal departments, including the U-S Department of Justice, hundreds of arrest warrants have been issued as the result of the Distressed Homeowner Initiative, the first-ever nationwide effort to target fraud schemes that prey upon suffering homeowners. The yearlong initiative, launched by the FBI, a co-chair of the Financial Fraud Enforcement Task Force’s Mortgage Fraud Working Group, resulted in 530 criminal defendants charged, including 172 executives, in 285 federal criminal indictments or information filed in U.S. District Courts across the country. These cases involved more than 73,000 homeowner victims and total losses by those victims estimated by law enforcement at more than $1 billion.  

“These comprehensive efforts represent an historic, government-wide commitment to eradicating mortgage fraud and related offenses,” said Attorney General Holder. “The success of the Distressed Homeowner Initiative, and the developments we announce today, underscore our determination to pursue these and other financial fraud criminals around the country.” 

From Oct. 1, 2011, to Sept. 30, 2012 (FY 2012), the Distressed Homeowner Initiative focused on fraud targeting homeowners, such as foreclosure rescue schemes that take advantage of homeowners who have fallen behind on their mortgage payments. Typically, the con-artist in such a scheme promises the homeowner that he can prevent foreclosure for a substantial fee by, for example, having so-called investors purchase the mortgage, or transferring title in the home to persons in league with the scammer. In the end, the homeowner can lose everything. Other targets of the Distressed Homeowner Initiative include perpetrators of loan modification schemes who obtained advance fees from homeowners after falsely promises that they would negotiate more favorable mortgage terms on behalf of the homeowners.   

“With home price increases helping homeowners get back above water and billions of dollars in new resources for families still at risk through the recent mortgage servicing settlement, borrowers are finally beginning to see the light at the end of the tunnel. We know, however, that too many families are still facing threats to sharing in that recovery,” said HUD Secretary Donovan. “The Financial Fraud Enforcement Task Force has made important progress through its Mortgage Fraud Working Group to crack down on some of the same types of scam artists that got us into this crisis in the first place—pushing predatory or fraudulent loans on families who simply wanted to own a home, and now pushing false hope for modification of those loans— often preying upon the trust families have in HUD and the Federal Housing Administration. With actions like those announced today, we send a very clear message: if you don’t operate ethically, transparently, and within the boundaries of the law, we will not hesitate to act.”      

As a part of the Justice Department’s efforts to improve the lives of struggling homeowners, the Financial Fraud Enforcement Task Force’s Victims’ Rights Committee, in partnership with the Certified Financial Planning Board and the Foundation for Financial Planning, will begin offering unprecedented pro-bono financial planning assistance to the victims of a foreclosure rescue scheme, indicted by the U.S. Attorney’s Office for the Central District of California. All 4,000 victims of the scheme, many of whom lost their homes as a result of the fraud, have been invited to attend a free financial planning workshop in Riverside, California. Those who attend the workshop will receive free financial information and education to assist them in recovering from the devastating effects the crime had on their lives and to help them plan for the future. The financial planners at the workshop will be able to answer critical questions relating to tax planning, debt management, foreclosure assistance, job loss, retirement planning, investment advice, insurance, employee benefits and more. 

“We recognize the negative impact that mortgage fraud and foreclosures have on our economy and on our communities.  We cannot merely investigate after the fact.  We must use intelligence and sophisticated techniques to identify and stop those who seek to defraud American homeowners.  We will continue to work with our partners across the country to ensure the integrity of the housing market, and to keep our communities safe,” said FBI Associate Deputy Director Perkins. 

In federal civil actions involving distressed homeowner victims, the Justice Department’s U.S. Trustee Program, the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB), protectors of the nation’s bankruptcy laws and federal consumer laws, filed 110 cases against 153 defendants in federal cases across the country, with more than 15,000 victims identified and losses estimated at more than $37 million.   False or abusive filings in U.S. Bankruptcy Court are commonly used to execute foreclosure rescue scams. State Attorneys General also filed criminal cases against 51defendants, with losses at more than $2 million, and also filed at least 104 civil enforcement actions against 125 defendants with losses to homeowners at approximately $5 million.  Last, the Treasury Department’s Office of Financial Stability’s Antifraud Unit and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), in order to protect homeowners from fraudulent or confusing websites that misuse the Treasury seal and key TARP housing program names, such as the Home Affordable Modification Program, shut down or forced into compliance more than 900 mortgage rescue websites or web advertisers.  

“With many homeowners still struggling to hold onto their homes, the FTC takes a hard line against con artists who are seeking their next victim,” said FTC Chairman Leibowitz. 

In order to protect struggling homeowners and increase the number of criminal enforcement actions made as part of this initiative, the members of the Mortgage Fraud Working Group were proactive. The FBI generated new investigations by gathering victim complaint data from FTC databases and other sources, analyzed the data and distributed information of lead value to field offices from coast-to-coast. The FBI, together with HUD Office of Inspector General, also utilized sophisticated undercover operations to facilitate the development of federal distressed homeowner criminal cases. Further, the FBI led a surge consisting of several law enforcement agencies in southern California, where many foreclosure rescue scam operators are located, to develop investigations that could be prosecuted in various federal districts. Many of the investigations initiated as part of the Distressed Homeowner Initiative are ongoing and will result in additional enforcement actions in the near future.   

The initiative included federal criminal prosecutions brought by various U.S. Attorneys’ offices and the Department of Justice’s Criminal and Civil Divisions, civil enforcement cases filed by the Department of Justice’s U.S. Trustee Program, FTC and CFPB and criminal and civil cases brought by Attorneys General in over 11 states.   Participating federal agencies included the FBI, the Office of Inspector General of the Department of Housing and Urban Development, the Federal Housing Finance Agency’s Office of Inspector General (FHFA-OIG), SIGTARP, Internal Revenue Service-Criminal Investigation, U.S. Postal Inspection Service and the U.S. Secret Service. In addition, the Financial Crimes Enforcement Network, a task force partner, announced today that during the Distressed Homeowner Initiative it collected 4,395 foreclosure rescue Suspicious Activity Reports, a critical tool for law enforcement agencies when conducting investigations. For more on this announcement, please visit: www.FinCEN.Gov. 

To learn more about scams targeting homeowners, how protect yourself from scams or how to report fraud if you believe you have been a victim, please visit: www.stopfraud.gov.

Full text of Justice Department press release, click here - 10/10/2012

INTERNATIONAL MONETARY FUND MAY REDUCE WORLD GROWTH PROJECTIONS AGAIN / SAYS U-S POLITICAL GRIDLOCK PARTLY TO BLAME

More from the Emeritus Newsroom - Christine Lagarde, Managing Director of the International Monetary Fund, today urged policymakers to use the window of opportunity offered by recent policy decisions—and to take the actions needed to achieve a decisive turn in the global crisis.

“This time, we need a sustained rebound, not a bounce. If this time is to be different, we need certainty, not uncertainty. We need decision makers to be real action takers. We need delivery,” she said in a speech at the Peterson Institute for International Economics.

She described recent initiatives by major central banks as “big policy signals in the right direction”—the European Central Bank’s OMT bond-purchasing program, QE3 by the U.S. Federal Reserve, and the Bank of Japan’s expanded Asset Purchase Program. At the same time, Ms. Lagarde warned that the global economy is still fraught with risks and policy uncertainty is weighing growth down. The IMF continues to project a gradual recovery, but global growth will likely be a bit weaker than anticipated even in July, she said.

Speaking ahead of the joint Annual Meetings of the IMF and World Bank Boards of Governors in Tokyo, Ms. Lagarde focused on three key sets of policy challenges: the unfinished agenda for Europe and the United States; increased pressures in the rest of the world; and commitments on which the IMF also must deliver.

“Europe obviously remains the epicenter of the crisis and where the most urgent action is needed,” she said, calling on European policymakers to deliver on their commitments—including by establishing a single supervisory banking mechanism and enabling the direct recapitalization of banks. Other actions include implementing the European financial firewall—notably the European Stability Mechanism; the agreed plan for fiscal union; and, at the country level, the reforms that are essential for growth, jobs, and competitiveness.

Ms. Lagarde said that another major risk to the global economy is in the United States, where “current law implies a dramatic tightening of the deficit by about 4 per cent of GDP next year… Failure to reach a deal on raising the debt ceiling could also force a dramatic tightening.” She called for action to avoid this so-called “fiscal cliff” and a concrete plan “to bring down debt gradually over the medium term.”

Ms. Lagarde also noted how, after leading the global economy in the current recovery, the major emerging markets are now slowing; she urged them to focus on countering vulnerabilities, whether domestic or external. She added that she is pushing hard to ensure adequate financing for low-income countries, including through the IMF’s concessional lending via the Poverty Reduction and Growth Trust (PRGT). She also called for increased support from the international community so that successful transformation in the Middle East can be based on a “foundation of inclusive growth and employment.”

Full text of IMF statement, click here - 09/25/2012

DISCOVER CARD AGREES TO PAY 200+ MILLION TO CUSTOMERS IN DECEPTIVE AND UNSOUND BANKING PRACTICES CASE

More from the Emeritus Newsroom- Discover Financial Services has agreed to pay more than $200 million dollars to more than 3.5 million customers to settle a case against them brought by the Consumer Financial Protection Bureau and the FDIC. Discover was fined another $14 million for violating federal law.

The complaint against Discover accuses the company of marketing additional card services including payment protection plans, often without the knowlege or proper notification to those charged for the services.

The agency says Discover has agreed to:

• Stop deceptive marketing: Discover is required to institute certain changes to its telemarketing of these products that are designed to ensure that these unlawful acts do not occur again. Discover has also agreed to submit a compliance plan to the CFPB and the FDIC for approval, and to take specific corrective actions related to the products.

• Pay restitution to consumers who purchased the products: Discover will pay approximately $200 million in restitution to more than 3.5 million consumers who were charged for one or more of the products between December 1, 2007 and August 31, 2011. All consumers affected by Discover’s deceptive practices regarding these products, except those who affirmatively made use of Payment Protection, will receive restitution with amounts varying depending on when they purchased, and how long they held, the add-on products. All consumers will receive at least 90 days’ worth of fees paid (minus any refunds they have already received), with approximately 2 million consumers receiving full restitution of all of the fees they paid.

• Provide refunds or credits without any further action by consumers: Consumers are not required to take any action to receive their credit or check. If an affected consumer is still a Discover customer, he or she will receive a credit to his or her account. If an affected consumer is no longer a Discover credit card holder, the consumer will receive a check in the mail or have any outstanding balance reduced by the amount of the refund.

• Submit to an independent audit: Compliance with the restitution terms of the order will be assured through the work of an independent auditor, who will report to the CFPB and FDIC on Discover’s compliance with the joint CFPB-FDIC Consent Order.

The agency says anyone affected by this order will automatically receive a credit to their account, or, if they’re no longer a Discover customer, they’ll receive a check in the mail or have any outstanding balance reduced by the amount of the refund. Consumers don’t need to take any further action to receive their credit or check. Those with questions are to contact Discover.

The CFPB also warns that scammers sometimes pop up in these situations. The agency says anyone who tries to charge you, tries to get you to disclose your personal information, or asks you to cash a check and send a portion to a third party in order to “claim your refund”, could be a scam. The agency's phone, (855) 411-CFPB.

Full text of actual concent order, click here - CFPB press release and summary of actions, click here - 09/24/2012

BERNIE MADOFF VICTIMS GET LARGEST PAYBACK SO FAR FROM LIQUIDATION TRUSTEE

More from the Washington Post, click here- 09/23/2012

WHY ROMNEY'S 47% COMMENT WAS SO OUTRAGEOUS

Click here for Op-Ed from Matt Miller, Senior Fellow at Center for American Progress - 09/18/2012

FORECLOSURES SPIKE IN STATES WHERE LEGAL COMPLICATIONS CUT FLOW

More from the Emeritus Newsroom - RealtyTrac® (www.realtytrac.com), the leading online  marketplace for foreclosure properties, today released its U.S. Foreclosure  Market Report™ for August 2012, which shows foreclosure filings — default  notices, scheduled auctions and bank  repossessions — were reported on 193,508 U.S. properties in August, an  increase of 1 percent from July but down 15 percent from August 2011. The  report also shows one in every 681 U.S. housing units with a foreclosure filing  during the month.

“Bucking the national trend, deferred foreclosure  activity boiled over in several states in August,” said Daren Blomquist, vice  president of RealtyTrac. “In judicial states such as Florida, Illinois, New  Jersey and New York, this was a continuation of a trend we’ve been seeing for  several months now. The increases in Florida and Illinois pushed foreclosure  rates in those states to the two highest in the country — supplanting the  non-judicial states of Arizona, California, Georgia and Nevada. Previous to  August, the nation’s top two state foreclosure rates have been from those four non-judicial  states every month since December 2010.

“Meanwhile foreclosure activity in most  non-judicial states stayed on a downward trajectory in August, with a few  exceptions,” Blomquist continued. “Most notably, Washington state documented a  38 percent annual increase in foreclosure activity in August after 16 straight  months of year-over-year declines. The rebounding activity in Washington state  is likely the result of lenders catching up with foreclosures delayed by a  state law that took effect in July 2011 and allowed homeowners facing  foreclosure to request mediation. This rebounding pattern will likely be  repeated in the coming months in other states that have passed legislation  delaying the foreclosure process.”

High-level findings from the report: 

• Foreclosure activity in the 24 non-judicial states and  District of Columbia combined decreased 31 percent annually, although 15  non-judicial states and DC posted monthly increases in foreclosure activity,  including Arkansas (61 percent), Utah (41 percent), Colorado (25 percent) and  Washington (23 percent). 

Foreclosure starts down after three straight monthly increases. Foreclosure starts — default  notices or scheduled foreclosure  auctions, depending on the state — were filed for the first time on 99,405  U.S. properties in August, a 1 percent increase from July but down 13 percent  from August 2011, when foreclosure starts hit a 17-month high.

Full text of RealtyTrac statement, click here - 09/13/2012

GOV. BROWN SIGNS CALIFORNIA LAW TO CUT PUBLIC PENSIONS / SOME SAY IT'S JUST THE BEGINNING

More from the LA Times, click here - 09/12/2012

AND THE BIG BANK COURT SETTLEMENTS JUST KEEP ON COMING

More from the Emeritus Newsroom - Shareholders involved in a lawsuit against Citigroup Inc. have reached a deal with the bank over losses during the 2008-2009 financial crisis which deflated share values. The suit claimed the company acted recklessly investing in toxic assets with intent of hiding the risks. This week, a a New York federal court judge granted preliminary approval to the $590 million dollar settlement. More in Reuters story below.

On another major front involving the largest banks, a government report claims settlements in February over bad foreclosure practices have been executed by the banks, which has helped many troubled homeowners. The $25 Billion settlement ordered the banks to modify mortgages to provide debt relief. See LA times story link and link to text of report, below .

“The report discloses that the banks have granted $10.56 billion in consumer relief to borrowers between March 1 and June 30, 2012. Additionally, first lien principal reduction trials were offered and begun for about 28,000 homeowners, totaling approximately $3 billion of potential relief,” said Joseph A. Smith, Jr., Monitor of the National Mortgage Settlement . “This information is self-reported and has not been confirmed by the professional firms working with me. Further, it represents gross dollar amounts and cannot be used to evaluate progress toward the banks’ $20 billion obligation.”
In addition, the report provides an update on the banks’ implementation of the settlement’s servicing standards.
“As of July 5, the services reported to me that 56 servicing standards have been incorporated into their business processes,” continued Smith. “Implementation of the mortgage servicing standards outlined in the settlement can be an important contribution to reform of the mortgage finance system.

See details in additional story from Reuters, click here - Also see LA Times report on easing of foreclosure crisis, click here - Links to press release and full report from Office of Mortgage Settlement Oversight, click here - 08/30/2012

MIDDLE CLASS HAS WORST ECONOMIC DECADE SINCE WORLD WAR TWO ACCORDING TO PEW STUDY

More from the Emeritus Newsroom - A study conducted by The Pew Research Center found 85% of self-described middle-class adults say it is more difficult now than it was a decade ago for middle-class people to maintain their standard of living. Of those who feel this way, 62% say “a lot” of the blame lies with Congress, while 54% say the same about banks and financial institutions, 47% about large corporations, 44% about the Bush administration, 39% about foreign competition and 34% about the Obama administration. Just 8% blame the middle class itself a lot.

The study also found:

In 2011, this middle-income tier included 51% of all adults; back in 1971, using the same income boundaries, it had included 61%. The hollowing of the middle has been accompanied by a dispersion of the population into the economic tiers both above and below. The upper-income tier rose to 20% of adults in 2011, up from 14% in 1971; the lower-income tier rose to 29%, up from 25%. However, over the same period, only the upper-income tier increased its share in the nation’s household income pie. It now takes in 46%, up from 29% four decades ago. The middle tier now takes in 45%, down from 62% four decades ago. The lower tier takes in 9%, down from 10% four decades ago.

For the middle-income group, the “lost decade” of the 2000s has been even worse for wealth loss than for income loss. The median income of the middle-income tier fell 5%, but median wealth (assets minus debt) declined by 28%, to $93,150 from $129,582.During this period, the median wealth of the upper-income tier was essentially unchanged—it rose by 1%, to $574,788 from $569,905. Meantime, the wealth of the lower-income tier plunged by 45%, albeit from a much smaller base, to $10,151 from $18,421.

The study also concludes that that neither candidate in the 2012 presidential race has sealed the deal with middle-class adults but that President Obama is in somewhat better shape than his Republican challenger, Mitt Romney.

About half (52%) of adults who self-identify as middle class say they believe Obama’s policies in a second term would help the middle class, while 39% say they would not help. By comparison, 42% say that Romney’s election would help the middle class, while 40% say it would not help. There is much more variance in the judgments of the middle class about the likely impact of the two candidates’ policies on the wealthy and the poor. Fully seven-in-ten (71%) middle-class respondents say Romney’s policies would help the wealthy, while just a third (33%) say they would help the poor. Judgments about Obama tilt the opposite way. Roughly four-in-ten (38%) middle-class respondents say his policies would help the wealthy, and about six-in-ten (62%) say they would help the poor.

Full text of Pew press release, click here - 08/23/2012

MORTGAGE SERVICERS MUST FOLLOW NEW FED RULES TO PREVENT SHODDY FORECLOSURE PRACTICES

More from the Emeritus Newsroom - The Consumer Financial Protection Bureau (CFPB) today proposed two notices containing rules to protect homeowners from surprises and costly mistakes by their mortgage servicers.

“Millions of homeowners are struggling to pay their mortgages, often through no fault of their own,” said CFPB Director Richard Cordray. “These proposed rules would offer consumers basic protections and put the ‘service’ back into mortgage servicing. The goal is to prevent mortgage servicers from giving their customers unwelcome surprises and runarounds.”

Mortgage servicers are responsible for collecting payments from the mortgage borrower on behalf of the loan’s owner. They also typically handle customer service, escrow accounts, collections, loan modifications, and foreclosures. Generally, the borrower has little say in the choice of mortgage servicer. Lenders frequently contract out servicing after the mortgage deal is signed.

Even before the financial crisis, the mortgage servicing industry had experienced problems with bad practices and sloppy record keeping. Now, with millions of homeowners in distress, many borrowers have complained about problems seeking loan modifications or other alternatives to and information about avoiding foreclosure. Borrowers say that servicers lose their applications and paperwork for loan modifications. And borrowers say that when errors arise, they find it difficult to have them corrected.

The Dodd-Frank Wall Street Reform and Consumer Protection Act addresses some of these problems and imposes certain requirements on servicers, which the CFPB is implementing and refining, and which will be finalized in January 2013. The Dodd-Frank Act also gave the CFPB the statutory authority to help fix the market by writing additional rules.

The CFPB first announced in April that it was considering a number of proposals to implement the Dodd-Frank Act requirements and address systemic problems in the servicing industry. The CFPB reached out to consumer groups, small servicers, other industry stakeholders, and various government agencies for input. In response to that feedback, the CFPB refined some of its earlier ideas to both enhance consumer protections – particularly regarding processes for evaluating consumers for alternatives to foreclosure – and also lessen potential burdens on small servicers.

The first set of CFPB’s proposed rules would provide consumers with clear and timely information about their mortgages so they can avoid costly surprises. They would bring greater transparency to the market. The proposed rules would do this with:

The second set of proposed rules would impose common-sense requirements for handling consumer accounts, correcting errors, and evaluating borrowers for options to avoid foreclosure. These “no-runaround” rules would include:

The CFPB’s proposed rules would mean that consumers would get better and timelier information about where they stand in the long foreclosure process. If their loan modification application is missing paperwork, for example, the servicer would have to tell them. Critically, the servicer would not be able to actually foreclose on the consumer without fully considering borrowers’ timely and complete applications for alternatives to foreclosure. The servicer would only be able to proceed with foreclosure if: a borrower does not qualify for options to avoid foreclosure; the borrower rejects a servicer’s offer of such options; or the borrower fails to keep up his or her end of a deal for such an option.

All of these proposed rules are part of the CFPB’s ongoing effort to address servicing problems and create uniform standards for the mortgage servicing industry – regardless of how big or small the servicer, where it is based, or what is its business charter.

In addition, CFPB is working with the Cornell University e-Rulemaking Initiative (CeRI) to make it easier for the public to comment on the proposed rules through a pilot project called Regulation Room (www.regulationroom.org). Regulation Room provides an online environment for people and groups to learn about, discuss, and react to selected rules proposed by federal agencies. Individual contributions to Regulation Room will not become formal public comments on the CFPB’s docket, but CFPB expects contributions will be incorporated into a public report prepared by CeRI researchers and submitted to the CFPB’s docket for use in preparation of a final rule.

The public will have 60 days, until October 9, 2012, to review and provide comments on the proposed rules. The CFPB will review and analyze the comments before issuing final rules in January 2013.

The proposed mortgage servicing rules are available here: http://files.consumerfinance.gov/f/201208_cfpb_tila_proposed_rules.pdf and http://files.consumerfinance.gov/f/201208_cfpb_respa_proposed_rules.pdf

A summary of the proposals is available here: http://files.consumerfinance.gov/f/201208_cfpb_detailed_summary_proposed_mortgage_servicing_rules.pdf

Full text of CFPB press release, click here - 08/10/2012

MORTGAGE SERVICERS MUST FOLLOW NEW FED RULES TO PREVENT SHODDY FORECLOSURE PRACTICES

More from the Emeritus Newsroom - The Consumer Financial Protection Bureau (CFPB) today proposed two notices containing rules to protect homeowners from surprises and costly mistakes by their mortgage servicers.

“Millions of homeowners are struggling to pay their mortgages, often through no fault of their own,” said CFPB Director Richard Cordray. “These proposed rules would offer consumers basic protections and put the ‘service’ back into mortgage servicing. The goal is to prevent mortgage servicers from giving their customers unwelcome surprises and runarounds.”

Mortgage servicers are responsible for collecting payments from the mortgage borrower on behalf of the loan’s owner. They also typically handle customer service, escrow accounts, collections, loan modifications, and foreclosures. Generally, the borrower has little say in the choice of mortgage servicer. Lenders frequently contract out servicing after the mortgage deal is signed.

Even before the financial crisis, the mortgage servicing industry had experienced problems with bad practices and sloppy record keeping. Now, with millions of homeowners in distress, many borrowers have complained about problems seeking loan modifications or other alternatives to and information about avoiding foreclosure. Borrowers say that servicers lose their applications and paperwork for loan modifications. And borrowers say that when errors arise, they find it difficult to have them corrected.

The Dodd-Frank Wall Street Reform and Consumer Protection Act addresses some of these problems and imposes certain requirements on servicers, which the CFPB is implementing and refining, and which will be finalized in January 2013. The Dodd-Frank Act also gave the CFPB the statutory authority to help fix the market by writing additional rules.

The CFPB first announced in April that it was considering a number of proposals to implement the Dodd-Frank Act requirements and address systemic problems in the servicing industry. The CFPB reached out to consumer groups, small servicers, other industry stakeholders, and various government agencies for input. In response to that feedback, the CFPB refined some of its earlier ideas to both enhance consumer protections – particularly regarding processes for evaluating consumers for alternatives to foreclosure – and also lessen potential burdens on small servicers.

The first set of CFPB’s proposed rules would provide consumers with clear and timely information about their mortgages so they can avoid costly surprises. They would bring greater transparency to the market. The proposed rules would do this with:

• Clear Monthly Mortgage Statements: Servicers would be required to provide regular statements which would include: a breakdown of payments by principal, interest, fees, and escrow; the amount of and due date of the next payment; recent transaction activity; and warnings about fees.
• Warning Before Interest Rate Adjusts: Servicers would have to provide earlier disclosures before the interest rate adjusts for most adjustable-rate mortgages. This disclosure would include information about alternatives and counseling resources if the new payment is unaffordable. This requirement would provide greater clarity to borrowers about the impact of interest rate changes. Existing disclosures for interest rate adjustments that cause a change in mortgage payments would be amended to include improved information and arrive earlier so that borrowers can anticipate consequences of payment changes.
• Options for Avoiding Costly “Force-Placed” Insurance: Servicers have the responsibility to ensure that borrowers maintain property insurance. If the borrower does not maintain this insurance, however, the servicer has the right to purchase insurance to protect the lender’s interest in the property. This is called “force-placed” insurance and is typically more expensive than insurance the borrower could privately purchase. The CFPB is proposing a rule that would provide more transparency in this process, including requiring servicers to give advance notice and pricing information before charging consumers for this insurance. The servicer would also be required to terminate the insurance within 15 days if it receives evidence that the borrower has the necessary insurance and the insurer would refund the force-placed insurance premiums.
• Early Information and Options for Avoiding Foreclosure: Servicers would be required to make good faith efforts to contact delinquent borrowers and inform them of their options to avoid foreclosure.

The second set of proposed rules would impose common-sense requirements for handling consumer accounts, correcting errors, and evaluating borrowers for options to avoid foreclosure. These “no-runaround” rules would include:

• Payments Promptly Credited: Servicers generally would have to credit a consumer’s account as of the date a payment is received.
• Maintain Accurate and Accessible Documents and Information: Servicers would be required to establish reasonable policies and procedures to provide accurate and current information to borrowers and minimize errors. They would have to submit accurate legal documents that comply with applicable law, help borrowers on options to avoid foreclosure, and provide oversight of their contractors and foreclosure attorneys.
• Errors Corrected Quickly: If a consumer notifies the servicer that she thinks there has been an error, the servicer would be required to acknowledge receiving the notification, conduct a reasonable investigation, and, in a timely manner, inform the consumer about the resolution.
• Direct and Ongoing Access to Servicer Personnel To Assist Delinquent Borrowers: Servicers would be required to provide delinquent borrowers with direct, easy, ongoing access to employees who are dedicated and empowered to help delinquent borrowers.
• Evaluate Borrowers For Options To Avoid Foreclosure: Servicers that offer options to borrowers to avoid foreclosure, such as loan modifications or other payment plans, would be required to promptly review applications for those options. Servicers would be prohibited from proceeding with a foreclosure sale until the review of the borrower’s application is complete. Servicers would also be required to let borrowers know when applications are incomplete and to allow borrowers to appeal certain servicer decisions.

The CFPB’s proposed rules would mean that consumers would get better and timelier information about where they stand in the long foreclosure process. If their loan modification application is missing paperwork, for example, the servicer would have to tell them. Critically, the servicer would not be able to actually foreclose on the consumer without fully considering borrowers’ timely and complete applications for alternatives to foreclosure. The servicer would only be able to proceed with foreclosure if: a borrower does not qualify for options to avoid foreclosure; the borrower rejects a servicer’s offer of such options; or the borrower fails to keep up his or her end of a deal for such an option.

All of these proposed rules are part of the CFPB’s ongoing effort to address servicing problems and create uniform standards for the mortgage servicing industry – regardless of how big or small the servicer, where it is based, or what is its business charter.

In addition, CFPB is working with the Cornell University e-Rulemaking Initiative (CeRI) to make it easier for the public to comment on the proposed rules through a pilot project called Regulation Room (www.regulationroom.org). Regulation Room provides an online environment for people and groups to learn about, discuss, and react to selected rules proposed by federal agencies. Individual contributions to Regulation Room will not become formal public comments on the CFPB’s docket, but CFPB expects contributions will be incorporated into a public report prepared by CeRI researchers and submitted to the CFPB’s docket for use in preparation of a final rule.

The public will have 60 days, until October 9, 2012, to review and provide comments on the proposed rules. The CFPB will review and analyze the comments before issuing final rules in January 2013.

The proposed mortgage servicing rules are available here: http://files.consumerfinance.gov/f/201208_cfpb_tila_proposed_rules.pdf and http://files.consumerfinance.gov/f/201208_cfpb_respa_proposed_rules.pdf

A summary of the proposals is available here: http://files.consumerfinance.gov/f/201208_cfpb_detailed_summary_proposed_mortgage_servicing_rules.pdf

Full text of CFPB press release, click here - 08/10/2012

MORTGAGE BANKERS SAY FORECLOSURES UP DURING 2 QTR 2012

More from the Emeritus Newsroom - The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 7.58 percent of all loans outstanding as of the end of the second quarter of 2012, an increase of 18 basis points from the first quarter, but a decrease of 86 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 41 basis points to 7.35 percent this quarter from 6.94 percent last quarter. Delinquency rates typically increase between the first and second quarters of the year.
The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans on which foreclosure actions were started during the second quarter was 0.96 percent, unchanged from last quarter and from one year ago. The percentage of loans in the foreclosure process at the end of the second quarter was 4.27 percent, down 12 basis points from the first quarter and 16 basis points lower than one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 7.31 percent, a decrease of 13 basis points from last quarter and a decrease of 54 basis points from one year ago.
The combined percentage of loans in foreclosure or at least one payment past due was 11.62 percent on a non-seasonally adjusted basis, a 29 basis point increase from last quarter, but a 92 basis points decrease from the same quarter one year ago.

Jay Brinkmann, MBA’s Chief Economist said, “Mortgage delinquencies were up only slightly over the last quarter. Perhaps more important than the small size of the increase, however, is the fact that it reversed the trend of fairly steady drops in delinquencies we have seen over the last year. This is consistent with the slowdown in the economy during the first half of the year and our stubbornly high unemployment rate. Whether this is just a temporary blip or a sign of a true change in direction for mortgage performance will fundamentally depend on the direction of employment over the remainder of the year.”

Brinkmann continued, “While the rate of new foreclosure filings was unchanged, that rate would have fallen were it not for the considerable jump in foreclosure starts on FHA loans. This quarter’s rate set an all-time record for FHA loans, but it was only slightly higher than the previous high set in 2010. The jump was due to one or more large servicers of FHA loans restarting foreclosure actions on delinquent FHA loans after the completion of the Department of Justice review and the mortgage servicing settlement. It does not, however, represent a significant decline in FHA performance. These loans had been considered seriously delinquent for some time and have now been moved from the 90-plus day delinquency bucket to the in foreclosure bucket, with little net change.

“Among the states, the rate of new foreclosure actions in Maryland was the highest in the nation during the second quarter, more than double the national average. The Maryland numbers, however, were largely driven by the resumption of foreclosures following the servicing settlement. While Maryland had the biggest increase in foreclosures, it also had the biggest drop in loans 90 days or more past due but not in foreclosure, an important step in working through the backlog of Maryland’s problem loans.

“Washington had the second largest increase in foreclosures started, after the implementation of new filing requirements delayed new foreclosures for one quarter in that state. As we have seen over the years, new state requirements have the effect of causing large quarter-to-quarter swings in foreclosure starts but have little long-term effect.

“In terms of the percentage of loans in foreclosure, Florida continues to lead the nation at 13.7 percent, more than three times the national average, followed by New Jersey at 7.7 percent, Illinois at 7.1 percent and New York at 6.5 percent. In contrast, Arizona and California, two of the states hit hardest by the housing downturn, are at 3.2 percent and 3.1 percent respectively, both more than a full percentage point below the national average.”

Mortgage Bankers statement, click here - 08/09/2012

FEDERAL RESERVE FINES MET LIFE $3.2 MILLION FOR SUBSIDIARY'S "UNSOUND" MORTGAGE PRACTICES

More from the Emeritus Newsroom - The Federal Reserve Board on Tuesday announced monetary sanctions totaling $3.2 million against MetLife, Inc. for failure to adequately oversee its subsidiary bank's mortgage loan servicing and foreclosure processing operations.  The oversight deficiencies represented unsafe and unsound practices at MetLife and corrective measures were required by a formal enforcement action issued against the company on April 13, 2011.

The $3.2 million assessed against MetLife takes into account the maximum amount prescribed for unsafe and unsound practices under the applicable statutory limits, the comparative severity of MetLife's misconduct, and the comparative size of MetLife's foreclosure activities. 

The April 2011 action against MetLife was among 14 corrective actions issued against large mortgage servicers or their parent holding companies for unsafe and unsound processes and practices in residential mortgage loans servicing and foreclosure processing.  Those deficiencies were identified by examiners during reviews conducted from November 2010 to January 2011.   

The Board's assessment order against MetLife contains similar terms to those in the assessment orders issued by the Board in February 2012 imposing monetary sanctions against five other mortgage servicing organizations.  The Board's assessments against these five organizations were issued in conjunction with a comprehensive settlement agreement between the organizations and the state attorneys general and the U.S. Department of Justice requiring the organizations to provide payments and designated types of monetary assistance and remediation to residential mortgage borrowers.  Although MetLife was not a party to the settlement in February, the Board's monetary sanctions against MetLife contemplate the possibility of a similar settlement under which MetLife agrees to provide borrower assistance or remediation. 

In particular, if by June 30, 2013, MetLife enters into a settlement with the attorneys general and Justice Department similar to the February agreement, MetLife must pay the Board the amount not expended by MetLife within two years of its agreement for borrower assistance or remediation in compliance with the settlement agreement. If there is no settlement agreement by June 30, 2013, MetLife will be required to pay to the Board the portion of the $3.2 million that it has not expended by August 6, 2014, on funding to nonprofit organizations for counseling to borrowers who are facing default or foreclosure, or in connection with the independent foreclosure reviews required by the April 2011 enforcement actions.

The Federal Reserve will closely monitor expenditures on borrower assistance and remediation and the counseling program and compliance by MetLife with the requirements of the monetary sanctions issued by the Board. Any money paid by MetLife to the Board will be remitted to the U.S. Treasury.

The Board is taking action against MetLife at this time in light of MetLife's publicly announced decision to sell its subsidiary bank's deposit-taking operations.  Because that sale is subject to formal approval by regulators other than the Board and would result in MetLife no longer being a bank holding company, the Board believes it is appropriate to act at this time. 

The Board continues to believe that monetary sanctions in the remaining cases are appropriate and plans to announce monetary penalties against those organizations.

Full text of Federal Reserve statement, click here - 08/07/2012

INDEPENDENT STUDY BY BROOKINGS INSTITUTION AND TAX POLICY CENTER CLAIMS ROMNEY TAX PLAN WOULD CUT TAXES FOR RICH / RAISE THEM FOR MIDDLE CLASS

More from the Emeritus Newsroom - A study of the effects of income tax reform has concluded that a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed – including reducing marginal tax rates substantially, eliminating the individual alternative minimum tax (AMT) and maintaining all tax breaks for saving and investment – would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers. The authors claim, "This is true even when we bias our assumptions about which and whose tax expenditures are reduced to make the resulting tax system as progressive as possible. For instance, even when we assume that tax breaks – like the charitable deduction, mortgage interest deduction, and the exclusion for health insurance – are completely eliminated for higher-income households first, and only then reduced as necessary for other households to achieve overall revenue-neutrality– the net effect of the plan would be a tax cut for high-income households coupled with a tax increase for middle-income households".

In addition, according to the authors of the study, although reasonable models would show that these tax changes would have little effect on growth, we show that even with implausibly large growth effects, revenue neutrality would still require large reductions in tax expenditures and would likely result in a net tax increase for lower- and middle-income households and tax cuts for high-income households.It would be possible to reduce the regressivity of such plans or even to maintain progressivity in such plans with reductions in the tax rate cuts for high-income taxpayers and/or significant reductions in the tax preferences for saving and investment, including the preferential rates on capital gains and dividends.

The authors of the study were,

Samuel Brown , Research Associate, Economic Studies

William G. Gale Co-director , Urban-Brookings Tax Policy Center

Adam Looney ,Policy Director, The Hamilton Project

Full text of report, click here - 08/01/2012

U-S DEFAULTS ON $5.5 BILLION RETIREE HEALTH CARE FUND PAYMENT FOR THE POSTAL SERVICE / ANOTHER PAYMENT DUE NEXT MONTH

More from the Federal Times Blog , click here- Also, check out this must read Op-Ed from the New York Times, click here - 08/01/2012

BENEFITS EXTENDED TO SAME SEX PARTNERS OF FEDERAL WORKERS

More from the Chicago Tribune, click here - 08/23/2012

TWO MORE STUDIES SHOW CORPORATE AND STATE PENSION SHORTFALLS

More from the LA Times, click here - 07/18/2012

FED CHAIR BERNANKE SAYS U-S RECOVERY FRUSTRATINGLY SLOW

More from the Voice of America - Federal Reserve Chairman Ben Bernanke says the U.S. economic recovery has slowed and it will take a "frustratingly" long time to cut the unemployment rate.

The head of the U.S. central bank spoke at a congressional hearing Tuesday after reports showed inflation to be relatively mild, while job growth and retail sales were disappointing.

Bernanke said Europe's economy is under "significant stress" which is spilling over to the rest of the world, including the United States.

He said the U.S. economy could also be hurt if Congress and the president fail to reach agreements on tax and spending issues before the end of this year.  He again urged Congress to cut spending, but at a slow enough pace to avoid hurting growth while the U.S. economy is in a fragile state.

"The most effective way that the Congress could help to support the economy right now would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery. Doing so earlier rather than later would help reduce uncertainty and boost household and business confidence," he said.

In the meantime, Bernanke said the Fed is ready to take further action to bolster growth if needed.

The Fed has already cut interest rates to nearly zero and used a complex process of bond purchases in another effort to stimulate the economy.

Senators also questioned Bernanke about a scandal over the way a critical global interest rate, called the LIBOR, was set.

Barclays bank recently paid a fine of around $450 million to the U.S. and British governments after the bank gave false information to the British official who sets the rate each day.  

It was an effort to make Barclays look stronger than it was during the financial crisis.

Bernanke said Fed officials in New York became aware of allegations during the financial crisis and reported the matter to British regulatory officials.

07/17/2012

CONSUMER FINANCIAL PROTECTION BUREAU TAKES OVER POLICING CREDIT REPORTING AGENCIES

More from the Emeritus Newsroom - The top credit reporting companies including, Equifax, Experian and TransUnion, effective September 30th, will be under the supervision of the Consumer Financial Protection Bureau, the new federal agency established under the Dodd-Frank Act.

Today the CFPB announced it is posting the names of those companies including specialty reporting agencies, which may not be under CFPB supervision.

According to the CFPB, specialty reporting companies collect and share information with creditors and other businesses. There are a lot of these companies on the list which includes information about how you can get copies of your reports.

You can access the list here. Keep the following in mind:

You’re welcome to read through the entire list top-to-bottom. We’ve also arranged it by specialty, and you can follow links from the first page to the appropriate section of the list. The list covers the following specialties:

Full text of CFPB announcement, click here - 07/16/2012

SOCIAL SECURITY ADMINISTRATION PAYING OUT DEATH BENEFITS FOR THOSE WITH NO DEATH CERTIFICATES

More from the Emeritus Newsroom- An Inspector General's report on the Social Security Administration shows the agency did not have a proper documentation showing 1.2 million deceased beneficiaries were actually dead. Also included in the IG audit highlights, 681 deceased beneficiaries had earnings on the Master Earnings File that were recorded 1 or more years after their deaths, and 23 employers made 30 E-Verify inquiries for 23 deceased beneficiaries and did not receive any indication that these individuals were deceased.

The IG's office also suggested that SSA:
1. Analyze its death processing systems to ensure it records death information on the Numident and determine whether it can efficiently correct any of the 1.2 million beneficiary records identified by our audit.
2. Develop a cost-effective method for identifying deceased beneficiaries who have death information on the Master Beneficiary Record (MBR) but not on the Numident. This could involve periodic matches between the MBR and Numident to detect and correct missing death information.

Full report and summary from Inspector General, click here - 07/13/2012

AMERICANS PAY LOWEST FEDERAL TAX RATES IN 30 YEARS

More from the Emeritus Newsroom - The Congressional Budget Office says the recent recession has had a substantial impact on income, the amount of taxes owed, and average tax rates. Changes in households’ before-tax income and average tax rates in 2008 and 2009 were substantial and differed markedly across the income distribution brackets. Average after-tax income fell notably, owing to a drop in market income caused by the recession that began in December 2007 that was only partially offset by increases in government transfers and decreases in federal taxes.

The CBO report, released today, shows the overall average federal tax rates were 18.0 percent in 2008 and 17.4 percent in 2009, the lowest in a period from 1979-2009 and were well below the previous low of 19.4 percent in 2003 and the average of 21.0 percent over that period.

the CBO also found that average before-tax incomes fell between 2007 and 2009 for households in all income brackets, but the amount of that decline varied . The declines in before-tax income were 5 percent or less for households in each of the four lowest income brackets and 18 percent for households in the top fifth of incomes. For households in the top one percent, income fell by 36 percent, reducing their share of before-tax income from 18.7 percent to 13.4 percent.

CBO summary and links to full text, click here - 07/10/2012

SOME G-M RETIREE PENSIONS WILL BE CUT DUE TO DELPHI BANKRUPTCY / DEFINED PENSIONS TERMINATED

More from the Emeritus Newsroom - The GM and Delphi bankruptcies have brought a lot of attention to the defined pension plans at both companies with some workers, including those in unions, doing better than others. The biggest losers are those whose defined pensions were spun off from GM into the Delphi (formerly DELCO division of GM) defined pensions. With the dust settling from the financial disasters within GM and Delphi, the Government Accountability Office has completed a review of what happened and why.

The Delphi Corporation was a global supplier of mobile electronics and transportation systems that began as part of GM and was spun off in 1999. Delphi filed for bankruptcy in 2005, and in July 2009, The federally backed agency called the Pension Benefit Guaranty Corporation (PBGC) terminated Delphi's six defined benefit pension plans and assumed trusteeship of the plans. Because of the resulting differences in participant benefits, questions have been raised about how PBGC came to terminate the plans, whether treatment for certain Delphi workers was preferential, and the role of Treasury in these outcomes.

The GAO found that when Delphi spun off from GM in 1999, three unions secured an agreement that GM would provide a retirement benefit supplement (referred to as "top-ups") for their members should their pension plans be frozen or terminated and they were to suffer a resulting loss in pension benefits. These three unions were: (1) the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW); (2) the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, AFL-CIO (IUE); and (3) the United Steelworkers of America (USWA). No other Delphi employees had a similar agreement to receive a top-up, including salaried workers and hourly workers belonging to other unions. Over the course of events that unfolded over the next decade, the agreements with these three unions ultimately were preserved through the resolution of the bankruptcies of both GM and Delphi. Because Delphi’s pension plans were terminated with insufficient assets to pay all accrued benefits, and because PBGC must adhere to statutory limits on the benefits it guarantees, many Delphi employees will receive a reduced pension benefit from PBGC compared with the benefits promised by their defined benefit plans. Those Delphi employees receiving the top-ups will have their reduced PBGC benefit supplemented by GM while others will not.

As GM’s primary lender in bankruptcy, Treasury played a significant role in helping GM resolve the Delphi bankruptcy. Treasury’s effort to restructure GM included helping GM find the best resolution of the Delphi bankruptcy from GM’s perspective. This effort was guided by the following principles: preserving GM’s supply chain, resolving Delphi’s bankruptcy as quickly as possible, and doing so with the least possible amount of investment by GM. However, court filings and statements from GM and Treasury officials suggest that Treasury deferred to GM’s business judgment on decisions about the Delphi pension plans—that is, their sponsorship and the decision to honor existing top-up agreements. According to public records and Treasury officials, Treasury agreed with GM’s assessment that the company could not afford the potential costs of taking over sponsorship of the Delphi hourly plan, but that the company had solid commercial reasons to honor previously negotiated top-up agreements with some unions. Nevertheless, Treasury officials said that Treasury did not explicitly approve or disapprove of GM's agreement to honor previously negotiated top-up agreements. PBGC officials stated that PBGC decided to terminate the plans independently of Treasury input.

GAO summary and full text of report, click here - 07/10/2012

GOVERNMENT ASSISTANCE NUMBERS UP / GREATEST INCREASE AMONG THOSE 18-64

More from the Emeritus Newsroom- A report from the Census Bureau finds children still receive the higher percentage of government assistance benefits, however the largest increase in recent years, is among those age 18-64.

According to the report, children under 18 years of age were more likely to receive means-tested benefits than those aged 18 to 64 and those 65 years and older. In an average month during 2009, 34.6 percent of children received some type of means-tested benefit, compared with 13.7 percent of people aged18 to 64 and 12.6 percent of people 65 years and older. From 2004 to 2009, the percentage of children who received some type of meanstested benefit in 1 or more months of the year increased 2.6 percentage points from 41.3 percent to 43.9 percent, and the percentage of people aged 18 to 64 that received some type of means-tested benefit in one or more months of the year increased 4.1 percentage points from 15.6 percent to 19.7 percent. There was no significant change for those 65 years and over . Among children, participation in means-tested programs tended to be long-term, with 19.2 percent
collecting benefits in all 24 months of calendar years 2004 and 2005, compared to 12.3 percent collecting benefits in 12 to 23 months and 15.0 percent collecting benefits in 1 to 11 months. The report also found increases in assistance to families headed by single mothers.

Full text of report, click here - 07/10/2012

54% OF SSI CLAIMS FOR CHILDREN AND THOSE WITH MENTAL IMPAIRMENTS DENIED / GAO SAYS IMPROVEMENTS NEEDED FOR CASE MONITORING

More from the Emeritus Newsroom - A study conducted by the Government Accountability Office says the Social Security Administration's Supplemental Security Income program has growth significantly, in large part, due to poverty. The SSI program provides cash benefits to eligible low-income individuals with disabilities, including children. In 2011, SSA paid more than $9 billion to about 1.3 million disabled children, the majority of whom received benefits due to a mental impairment. GAO was asked to assess (1) trends in the rate of children receiving SSI benefits due to mental impairments over the past decade; (2) the role that medical and non medical information, such as medication and school records, play in the initial determination of a child’s eligibility; and (3) steps SSA has taken to monitor the continued medical eligibility of these children.

the GAO says the number of Supplemental Security Income (SSI) child applicants and recipients with mental impairments has increased substantially for more than a decade, even though the Social Security Administration (SSA) denied, on average, 54 percent of such claims from fiscal years 2000 to 2011. Factors such as the rising number of children in poverty and increasing diagnosis of certain mental impairments have likely contributed to this growth. In fiscal year 2011, the most prevalent primary mental impairments among children found medically eligible were (1) attention deficit hyperactivity disorder, (2) speech and language delay, and (3) autism, with autism claims growing most rapidly since fiscal year 2000. State disability determination services (DDS) examiners also consider the impact of additional, or “secondary,” impairments when making a decision, and when present, these impairments were used to support 55 percent of those cases GAO reviewed that were allowed in fiscal year 2010. However, SSA has not consistently collected those impairment data, limiting its understanding of how all impairments may affect decisions.

The GAO found that DDS examiners generally rely on a combination of key medical and non medical information—such as medical records and teacher assessments—to determine a child’s medical eligibility for SSI. In its case file review, GAO found that examiners usually cited four to five information sources as the basis for their decision, and that being on medication was never the sole source of support for decisions. Moreover, examiners cited medication and treatment information, such as reports of improved functioning, as a basis for denying benefits in more than half of cases that GAO reviewed, despite a perception among some parents that medicating their child would result in an award of benefits. Examiners also reported they sometimes lacked complete information to inform their decision making. For example, several DDS offices reported obstacles to obtaining information from schools, which they believe to be critical in understanding how a child functions. Examiners also do not routinely receive information from SSA field offices on multiple children who receive benefits in the same household, which SSA’s fraud investigations unit has noted as an indicator of possible fraud or abuse. Without such information, examiners may be limited in their ability to identify threats to program integrity.

The GAO study found SSA has conducted fewer continuing disability reviews (CDR) for children since 2000, even though it is generally required by law to review the medical eligibility of certain children at least every 3 years. From fiscal year 2000 to 2011, childhood CDRs overall fell from more than 150,000 to about 45,000 (a 70 percent decrease), while CDRs for children with mental impairments dropped from more than 84,000 to about 16,000 (an 80 percent decrease). The most recent data show that more than 400,000 CDRs were overdue for children with mental impairments, with some pending by as many as 13 years or more. Of the more than 24,000 CDRs found to be 6 or more years overdue, 25 percent were for children expected to medically improve within 6 to 18 months of their initial allowance. SSA acknowledged the importance of conducting such reviews, but said that due to resource constraints and other workloads, such as initial claims, most childhood CDRs are a lower priority. SSA’s process for issuing waivers from the CDR legal requirement lacks transparency, and without these reviews, SSA could continue to forgo significant program savings.

Full text of GAO summary and report, click here - 06/26/2012

MILITARY FAMILES GET BREAK UNLOADING HOMES DUE TO TRANSFERS / "SHORT SALE" REQUIREMENTS EASED

More from video below from the Pentagon Channel - 06/26/2012

JP MORGAN CHASE CEO TELLS CONGRESS, BANK MAY GO AFTER EXECUTIVES REPONSIBLE FOR $2 BILLION TRADING LOSS

More from the Emeritus Newsroom - The Board of JP Morgan Chase may recover the recent loss of at least $2 billion in trading losses from executives responsible. So says the bank's CEO Jamie Dimon, who testified today before the Senate Banking Committee. Though he apologized for the losses, which have been estimated anywhere from to $2 billion to $7 billion, he did not take personal responsibility for the losses.

Dimon told the Committee that the bank's Chief Investment Office (CIO)strategy was not carefully analyzed or subjected to rigorous stress testing within CIO and was not reviewed outside CIO. He explained that , "Personnel in key control roles in CIO were in transition and risk control functions were generally ineffective in challenging the judgment of CIO’s trading personnel. Risk committee structures and processes in CIO were not as formal or robust as they should have been". Dimon also says the bank has replaced those responsible with new personnel in the CIO to improve trading and monitoring of those trades".

Shouting protesters, critical of the bank, were led out of the hearing room by Capitol Police.

Before Dimon's testimony, Banking Committee Chairman Sen. Tim Johnson (D) ND, said,

Chairman Johnson Statement, click here - Dimon statement, click here - Recorded webcast video of hearing, click here (hearing begins at 26:00 into video, Dimon at 40:00) - 06/13/2012

AMERICAN FAMILY WEALTH LOWEST IN 20 YEARS

More from Reuters, click here - Actual Federal Reserve report, click here - 06/11/2012

FED CHAIR BERNANKE HEDGES ON WHAT WILL BE DONE TO SPUR U-S ECONOMY

More from the Emeritus Newsroom -Federal Reserve Chairman Ben Bernanke today told a Joint House-Senate Economic Committee that economic growth appears poised to continue at a moderate pace over coming quarters, supported in part by accommodative monetary policy. He added, "...Households continue to rate their income prospects as relatively poor and do not expect economic conditions to improve significantly. Similarly, concerns about developments in Europe, U.S. fiscal policy, and the strength and sustainability of the recovery have left some firms hesitant to expand capacity. The depressed housing market has also been an important drag on the recovery".

Bernanke made little comment about what the Fed will do to prevent the economy from lapsing into a double dip recession. He still anticipates it will take the U-S until 2017 to reach full employment. He pointed out three steps which must be taken by the federal government to deal with the recent slowdown.

"First, to promote economic growth and stability, the federal budget must be put on a sustainable long-run path.

"...A second objective should be to avoid unnecessarily impeding the current economic recovery. Indeed, a severe tightening of fiscal policy at the beginning of next year that is built into current law--the so-called fiscal cliff--would, if allowed to occur, pose a significant threat to the recovery. Moreover, uncertainty about the resolution of these fiscal issues could itself undermine business and household confidence. Fortunately, avoiding the fiscal cliff and achieving long-term fiscal sustainability are fully compatible and mutually reinforcing objectives. Preventing a sudden and severe contraction in fiscal policy will support the transition back to full employment, which should aid long-term fiscal sustainability.

"A third objective for fiscal policy is to promote a stronger economy in the medium and long term through the careful design of tax policies and spending programs. To the fullest extent possible, federal tax and spending policies should increase incentives to work and save, encourage investments in workforce skills, stimulate private capital formation, promote research and development, and provide necessary public infrastructure. Although we cannot expect our economy to grow its way out of federal budget imbalances without significant adjustment in fiscal policies, a more productive economy will ease the tradeoffs faced by fiscal policymakers".

Before Bernanke's testimony, committee chairman, Senator Bob Casey (D-PA), suggested legislation and other initiatives which lawmakers can pass to stimulate the economy. Casey admitted that cuts must be made to the federal budget without forcing tax increases to the middle class. He says they include the transportation infrastructure bill, already passed in the Senate and now in the House, which would provide more than 3 million jobs, expanding tax incentives to small businesses which expand their payrolls and a farm bill to help hard hit rural areas.

Text of Bernanke statement to committee, click here - Webcast of Bernanke testimony before committee along with questions from committee members, click here - 06/07/2012

TWO FEDERAL RESERVE BOARD MEMBERS SEE AGENCY ACTING TO PROP UP U-S ECONOMY / STOCK MARKET RALLIES ON NEWS

More from the Emeritus Newsroom - During a speech tonight to the Boston Economic Club, Federal Reserve Board Vice Chair Janet L. Yellen added her projection that the agency will take more action to shore up the U-S economy. Her speech followed that from Atlanta Federal Reserve Bank President Dennis Lockhart, who, earlier today, told a meeting of businessmen in Ft. Lauderdale, that there were "growing risks" for another economic slowdown and that the Fed would act to control it.

Better news from the economic crisis in Europe as well as Lockhart's comments, pushed today's Dow up 286 points, closing at 12,414.79.

Yellen spoke at length about the continued weak job market believing it will continue for some time to come.

"There are a number of significant downside risks to the economic outlook, and hence it may well be appropriate to insure against adverse shocks that could push the economy into territory where a self-reinforcing downward spiral of economic weakness would be difficult to arrest", Yellen explained. She added, "Although I view the bulk of the increase in unemployment since 2007 as cyclical, I am concerned that it could become a permanent problem if the recovery were to stall. In this economic downturn, the fraction of the workforce unemployed for six months or more has climbed much more than in previous recessions, and remains at a remarkably high level. Continued high unemployment could wreak long-term damage by eroding the skills and labor force attachment of workers suffering long-term unemployment, thereby turning what was initially cyclical into structural unemployment. This risk provides another important reason to support the recovery by maintaining a highly accommodative stance of monetary policy".

Yellen speech text, click here - ALSO SEE: Beige Book Report on U-S economy, click here - 06/06/2012

STUDY FINDS LAWS NEEDED TO PROTECT 401k EMPLOYERS AND WORKERS FROM EXORBITANT FEES

More from the Emeritus Newsroom- A random survey and review of randomly chosen 401k plan documents showed that some sponsors, or employers, faced challenges in understanding the fees they and their participants were charged. The review by the Government Accountability Office claims some sponsors, or employers, did not know if their providers used complex fee arrangements, such as revenue sharing, or if their plans paid certain fees under an insurance contract, such as a group annuity contract. In addition, some sponsors reported knowing about arrangements, but did not fully understand how these fees were charged. For example, one relatively large plan underestimated record keeping fees by more than $58,000, because the sponsor did not include the fees charged to participants’ accounts under its revenue sharing arrangement.

Generally speaking, the GAO says that plan sponsors and participants paid a range of fees for services, though smaller plans typically paid higher fees as a percentage of plan assets. For example, the average amount sponsors of small plans reported paying for record keeping and administrative services was 1.33 percent of assets annually, compared with 0.15 percent paid by sponsors of large plans. Larger plans were more likely to pass record keeping fees along to participants, but when fees were passed along to participants in small plans, those in large plans paid lower fees than those in small plans. Participants also paid for investment and plan consulting fees—through fees deducted from their plan assets—in more instances than sponsors.

According to GAO’s survey results, more than an estimated 90 percent of sponsors either did not know about or have not used Labor’s resources to compare and assess plan fees. Additionally, sponsors have access to the plan information of others, including some fees paid, through the Form 5500, but GAO’s survey also shows that the information is not being used by sponsors. Finally, although Labor has recently taken on regulatory initiatives to enhance fee disclosures to sponsors, their effect remains to be seen. For example, Labor is in the process of revising a proposed change to the definition of the term “fiduciary,” which may allow Labor to oversee a broader range of plan investment advisers. However, Labor’s authority over other types of providers, who have considerable influence over sponsors and may charge sponsors and their plan participants excessive fees, is limited.

Full text of GAO review, click here - 05/24/2012

LAWSUITS FOLLOW FACEBOOK INITIAL STOCK OFFERING - VOICE OF AMERICA REPORT (3 MINUTES) - 05/23/2012

CONGRESSIONAL BUDGET OFFICE FIRES ECONOMIC WARNING SHOT OVER EXTENDING TAX CUTS / CLAIMS ECONOMY WILL CONTRACT IN 2013 WITHOUT CONGRESSIONAL ACTION

More from the Emeritus Newsroom - The Congressional Budget Office today warned that economic growth in in the first half of 2013 could contract by 1.3% , depending on congressional action this year on the Obama and Bush tax cuts, in addition to federal spending.

The non partisan agency says under current law, increases in taxes and, to a lesser extent, reductions in spending will reduce the federal budget deficit dramatically between 2012 and 2013—a development that some observers have referred to as a “fiscal cliff”—and will dampen economic growth in the short term. CBO has analyzed the economic effects of reducing that fiscal restraint. It finds that reducing or eliminating the fiscal restraint would boost economic growth in 2013, but that adopting such a policy without imposing comparable restraint in future years would have substantial economic costs over the longer run.

CBO expects the 2013 economy to contract at an annual rate of 1.3 percent in the first half of the year and expand at an annual rate of 2.3 percent in the second half. Given the pattern of past recessions as identified by the National Bureau of Economic Research, such a contraction in output in the first half of 2013 would probably be judged to be a recession.

However, if congress decides to end the Obama payroll tax cuts and the Bush era income tax cuts on December 31st, as scheduled, CBO says it could reduce the federal budget deficit by 5.1 percent of GDP between calendar years 2012 and 2013. In that case, CBO estimates, the growth of real GDP in calendar year 2013 would lie in a broad range around 4.4 percent, well above the 0.5 percent projected for 2013 under current tax and spending policies. Major spending cuts next year, especially for defense, is also expected to have a drag on the economy.

Full text of CBO statement, click here - 05/22/2012

STUDY FINDS LAWS NEEDED TO PROTECT 401k EMPLOYERS AND WORKERS FROM EXORBITANT FEES

More from the Emeritus Newsroom- A random survey and review of randomly chosen 401k plan documents showed that some sponsors, or employers, faced challenges in understanding the fees they and their participants were charged. The review by the Government Accountability Office claims some sponsors, or employers, did not know if their providers used complex fee arrangements, such as revenue sharing, or if their plans paid certain fees under an insurance contract, such as a group annuity contract. In addition, some sponsors reported knowing about arrangements, but did not fully understand how these fees were charged. For example, one relatively large plan underestimated record keeping fees by more than $58,000, because the sponsor did not include the fees charged to participants’ accounts under its revenue sharing arrangement.

Generally speaking, the GAO says that plan sponsors and participants paid a range of fees for services, though smaller plans typically paid higher fees as a percentage of plan assets. For example, the average amount sponsors of small plans reported paying for record keeping and administrative services was 1.33 percent of assets annually, compared with 0.15 percent paid by sponsors of large plans. Larger plans were more likely to pass record keeping fees along to participants, but when fees were passed along to participants in small plans, those in large plans paid lower fees than those in small plans. Participants also paid for investment and plan consulting fees—through fees deducted from their plan assets—in more instances than sponsors.

According to GAO’s survey results, more than an estimated 90 percent of sponsors either did not know about or have not used Labor’s resources to compare and assess plan fees. Additionally, sponsors have access to the plan information of others, including some fees paid, through the Form 5500, but GAO’s survey also shows that the information is not being used by sponsors. Finally, although Labor has recently taken on regulatory initiatives to enhance fee disclosures to sponsors, their effect remains to be seen. For example, Labor is in the process of revising a proposed change to the definition of the term “fiduciary,” which may allow Labor to oversee a broader range of plan investment advisers. However, Labor’s authority over other types of providers, who have considerable influence over sponsors and may charge sponsors and their plan participants excessive fees, is limited.

Full text of GAO review, click here - 05/24/2012

THE STAGGERING HOUSING MARKET AND ONE FED MEMBER'S HOPES TO SOLVE THE CRISIS

More from the Emeritus Newsroom- U-S Federal Reserve Governor Elizabeth A. Duke, offered some solutions to the dour, though stabilizing housing market. During a speech today at the National Association of Realtors Midyear Legislative Meetings and Trade Expo in Washington, D.C. , Duke offered some positive news.

She explained the share of loans entering delinquency for the first time has been trending lower for more than two years. She also noted that although house prices have continued to fall year-over-year, the pace of decline has slowed notably and the month-over-month readings have shown increases for three months now. National house prices fell less than 1 percent for the year ending in March.

But, she sees the situation as having a tough climb ahead, citing sales resulting from foreclosures or short sales--and the specter of the large shadow inventory currently in the foreclosure pipeline. She claims much of the problem is due to high levels of unemployment, weak income growth, and negative equity. The Fed claims a staggering 2.2 million loans are in the foreclosure process and another 1.7 million loans are three or more payments behind. And Duke pointed out continuing delays in the foreclosure process, with more than 40 percent of loans in foreclosure being more than two years delinquent.

Full text of Duke statement, click here - 05/15/2012

MINNESOTA PAYS TO SETTLE RETIREMENT BENEFITS LAWSUIT RELATED TO AGE DISCRIMINATION

More from the Emeritus Newsroom - A clear signal has emerged from an agreement in a federal court affecting enticements for early retirement packages, not offered employees at retirement age.

The U.S. Equal Employment Opportunity Commission (EEOC) announced yesterday that a federal judge has approved a consent decree requiring the Minnesota Board of Public Defense (BOPD) to make restitution to settle an EEOC age discrimination lawsuit.

The BOPD must pay $53,000 to four former employees who were denied employer contributions for retiree health and dental insurance because they were older than age 55 at the time that they retired.  The BOPD must also to offer to pay future premium costs for one of the employees who would still be entitled to receive them but for the unlawful early retirement provision.

This decree, entered by federal Judge Richard Kyle, resolves the last in a series of cases brought by the EEOC against Minnesota state agencies regarding early retirement incentive plans contained in collective bargaining agreements for certain employees.  The incentive plans provided that the employee had to retire by age 55 to obtain the incentive, and would lose it if he or she worked longer.

For an employee who did retire by age 55, the employer continued to pay the employer’s share of the insurance premiums which generally ranged from 85% to 100% of the total amount of the premium—and continued to do so until the retiree reached age 65.  For an employee who retired after age 55, the employer paid nothing, and the cost of retiree insurance fell entirely on the retired employee.

Thus, explained EEOC Senior Trial Attorney Laurie Vasichek, who led the litigation team on the cases, “Not retiring by age 55 was like stepping off a cliff as far retiree medical insurance was concerned, and the parties to the collective bargaining agreements referred to this provision as the ‘Age 55 Cliff.’”

The EEOC contended that the “Age 55 Cliff” was unlawful age discrimination.  Courts agreed, with the U.S. Eighth Circuit Court of Appeals affirming a judgment by U.S. District Court Judge Paul A. Magnuson, which held that the early retirement incentives were arbitrary age discrimination.

The settlement with the BOPD is believed to resolve the final case in which the “Age 55 Cliff” was challenged.  The EEOC brought cases against six different state agencies in all.  In total, the EEOC obtained, through court judgments and consent decrees, just under $2 million in lost premium contributions, which were distributed to approximately 85 people.  The state also paid the employers’ share of health and dental insurance to those claimants who were eligible for it but for their age.

“As the courts recognized, it is arbitrary and unlawful for employers to maintain incentive plans that explicitly reduce benefits as people grow older,” said EEOC Regional Attorney John Hendrickson.  “Paying benefits for younger retirees while not paying the same benefits for other retirees -- merely because the latter were older at the time of retirement -- is pure and simple age discrimination, and it is unlawful.  But the situation has now been corrected, and we commend the state of Minnesota for working with the EEOC to resolve these cases.”

Full text of EEOC announcement, click here - 05/03/2012

IS INCOME INEQUALITY GOOD FOR THE ECONOMY?

More from the NY Times, click here - 05/02/2012

COURT ORDERS SOCIAL SECURITY ADMINISTRATION TO CHANGE BENEFIT DENIALS BASED ON OUTSTANDING ARREST WARRENTS

More from the Emeritus Newsroom - According to the National Senior Citizens Law Center, as many as 140,000 Americans nationwide will get their Social Security or Supplemental Security Income (SSI) benefits restored as a result of an order issued by Judge Sidney H. Stein in a federal court in Manhattan on April 13, 2012. The benefits in question date back to October 2006 and may total $1 billion.

According to the MSCLC, the order is the culmination of more than five years of litigation in Clark v. Astrue – Docket No. 06-15521 (S.D.N.Y.) – a case brought against the U.S. Social Security Administration (SSA) challenging its practice of relying exclusively on outstanding probation and parole warrants as sufficient evidence that individuals are in fact violating a condition of probation or parole as a basis for denying them benefits. Rather than check the facts of a case, SSA merely matched warrant databases against its records. When it found a probation or parole warrant in the name of someone who was receiving benefits, SSA checked with law enforcement and, if the law enforcement agency was not actively pursuing the individual, SSA would cut off that individual’s benefits. In March 2010, the U.S. Court of Appeals for the Second Circuit ruled that the agency’s practice of relying solely on outstanding probation or parole violation arrest warrants to suspend or deny benefits conflicted with the plain meaning of the Social Security Act. Under Judge Stein's order, the SSA is enjoined from denying or suspending benefits in this manner and must reinstate all previously suspended benefits retroactive to the date the benefits were suspended. The SSA has until June 12, 2012, to submit a plan setting forth its anticipated time frames for implementing the terms of the order.

The NSCLC detailed one case where a California woman, Elaine Clark, had her benefits stopped in the beginning of 2006 because of a warrant from Santa Clara County, CA, where she had been sentenced to probation and ordered to pay restitution as a result of an embezzlement charge. During that time, she was diagnosed with end-stage renal disease on top of other ailments and was no longer able to work. Unable to get a kidney transplant in California, she returned to her hometown of Buffalo, NY, when she learned the waiting time there would be far less. Although she obtained the transplant, she was still in need of extensive medical care and unable to work. Her modest Social Security benefit was barely enough to pay the rent at the long-term care facility and not sufficient to pay the required restitution. Ms. Clark died in 2008 at the age of 65. All the while, law enforcement officials in California knew where she was and knew of her condition, and had no interest in pursuing her.

Full ttext of NSCLC press release, click here - 04/26/2012

FEDERAL RESERVE SEES CONTINUED CAUTIOUS IMPROVEMENT FOR U-S ECONOMY

More from the Emeritus Newsroom- The Federal Reserve's Open Market Committee expects the economy to continue improving the rest of the year. The Fed released details of its March meeting, showing continued cautious optimism about the rest of the year. Also, this afternoon, the Fed released its projections through 2014.

According to the Fed, the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed. Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that it judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily, and the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

Full statement from the Federal Reserve, click here. Fed projections through 2014, click here - 04/25/2012

SLUGGISH ECONOMY / FICA TAX CUT BLAMED FOR SOCIAL SECURITY FUND RUNNING SHORT BY 2033

More from the Emeritus Newsroom - The Social Security Board of Trustees today released its annual report on the financial health of the Social Security Trust Funds.  The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be exhausted in 2033, three years sooner than projected last year.  The DI Trust Fund will be exhausted in 2016, two years earlier than last year’s estimate.  The Trustees also project that OASDI program costs will exceed non-interest income in 2012 and will remain higher throughout the remainder of the 75-year period.

Meanwhile, two Social Security advocacy groups say there are no surprises in the report and that the Social Security program is still sound. Click here for report from Committee to Preserve Social Security and Medicare. Click here for report from the Economic Policy Institute.

In the 2012 Annual Report to Congress, the Trustees announced:

• The projected point at which the combined Trust Funds will be exhausted comes in 2033 – three years sooner than projected last year.  At that time, there will be sufficient non-interest income coming in to pay about 75 percent of scheduled benefits.

• The projected actuarial deficit over the 75-year long-range period is 2.67 percent of taxable payroll -- 0.44 percentage point larger than in last year’s report.

• Over the 75-year period, the Trust Funds would require additional revenue equivalent to $8.6 trillion in present value dollars to pay all scheduled benefits.

“This year’s Trustees Report contains troubling, but not unexpected, projections about Social Security’s finances.  It once again emphasizes that Congress needs to act to ensure the long-term solvency of this important program, and needs to act within four years to avoid automatic cuts to people receiving disability benefits,” said Michael J. Astrue, Commissioner of Social Security.

Other highlights of the Trustees Report include:

• Income including interest to the combined OASDI Trust Funds amounted to $805 billion in 2011.  ($564 billion in net contributions, $24 billion from taxation of benefits, $114 billion in interest, and $103 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2011 payroll tax legislation.)

• Total expenditures from the combined OASDI Trust Funds amounted to $736 billion in 2011. 

• Non-interest income fell below program costs in 2010 for the first time since 1983.  Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.

• The assets of the combined OASDI Trust Funds increased by $69 billion in 2011 to a total of $2.7 trillion.

• During 2011, an estimated 158 million people had earnings covered by Social Security and paid payroll taxes.

• Social Security paid benefits of $725 billion in calendar year 2011.  There were about 55 million beneficiaries at the end of the calendar year. 

• The cost of $6.4 billion to administer the program in 2011 was a very low 0.9 percent of total expenditures.

• The combined Trust Fund assets earned interest at an effective annual rate of 4.4 percent in 2011.

The Board of Trustees is comprised of six members.  Four serve by virtue of their positions with the federal government: Timothy F. Geithner, Secretary of the Treasury and Managing Trustee; Michael J. Astrue, Commissioner of Social Security; Kathleen Sebelius, Secretary of Health and Human Services; and Hilda L. Solis, Secretary of Labor.  The two public trustees are Charles P. Blahous, III and Robert D. Reischauer.

The 2012 Trustees Report will be posted at www.socialsecurity.gov/OACT/TR/2012/ on Monday afternoon.

04/23/2012

NO EVIDENCE OF WIDESPREAD MIGRATION TO STATES DUE TO LOWER TAXES / MOVES MOSTLY DUE TO JOBS, HOUSING COSTS

More from the Center for Budget and Policy Priorities, click here - 04/22/2012

PRESIDENT SIGNS LAW TO BAN INSIDER TRADING BY MEMBERS OF CONGRESS

More from the Emeritus Newsroom - Members of congress and their staffs are now prohibited from using any insider information to make stock trades. The so- called, "The STOCK Act" , was signed into law today by President Obama.

According to a statement from the White House, The STOCK Act amends the Ethics in Government Act of 1978 to require a government-wide shift to electronic reporting and online availability of public financial disclosure information.  The STOCK Act provides additional transparency for Members of Congress, legislative staff and other government employees currently required to make public financial disclosures:

• Trade Reporting:  requires that Members of Congress and government employees report certain investment transactions within 45 days after a trade.

• Online Availability: mandates that the information in public financial disclosure reports (currently made available on request) be made available on agency websites and ultimately through searchable, sortable databases. 

Members of Congress and staff are not exempt from the insider trading prohibitions of federal securities laws and gives House and Senate ethics committees authority to implement additional ethics rules.  The Act makes clear that Members and staff owe a duty to the citizens of the United States not to misappropriate nonpublic information to make a profit.  

Included in the act are new ethics requirements.

• Expands Pension Forfeiture for Corrupt Members:  the STOCK Act requires forfeiture of federal pension if a Member of Congress commits one of several corruption offenses while serving as an elected official.  Current law forfeits a Member’s pension for conviction of offenses committed while serving in Congress.  The STOCK Act expands forfeiture to apply to misconduct by Members committed in other federal, state and local elected offices and adds further federal crimes, including insider trading, for which forfeiture will be required.

• Requires Disclosure of Terms of Mortgages:  the STOCK Act will require Members and certain high level government officials to disclose the terms of personal mortgages.

• Bans Special Access to Initial Public Offerings (IPOs):  the STOCK Act limits participation in IPOs by Members and senior government employees to purchases available to the public generally.

• Requires Report on Political Intelligence in the Financial Markets:  the STOCK Act requires GAO and CRS to produce a report on the role of political intelligence firms in the financial markets. 

• Requires Job Seekers to Disclose:  the STOCK Act requires that Members of Congress and senior federal employees file a written notification with their ethics office when starting a job negotiation to leave the government. 

Bans Bonuses for Fannie & Freddie Executives:  the STOCK Act bars senior executives at Fannie Mae and Freddie Mac from receiving bonuses during any period of conservatorship after enactment.

White House fact sheet on The STOCK Act, click here - Video of signing below - 04/04/2012

ISSUES UPDATE: THE FUTURE OF PENSIONS FOR PUBLIC EMPLOYEES

More in this article on the California public pension system from the New York Times, click here- YouTube video of same story from PBS NewsHour, click here - 03/17/2012

FED SAYS ECONOMY "EXPANDING MODERATELY"

More from the Emeritus Newsroom- The Federal Reserve this afternoon announced it was keeping the federal funds rate at 0 to 1/4 percent, finding that the economy continues to improve with inflationary pressures stable. In the January meeting minutes, released today from the Fed's Federal Open Market Committee, the group decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The news sent stocks higher with the NYSE closing up 1.7% or 200 points at 13,177.68 and the NASDAQ was up 1.9% to 3,039.88.

Full text of Fed statement, click here. 03/13/2012

BANK OF AMERICA TO PAY $1 BILLION IN MORTGAGE FRAUD COURT SETTLEMENT / INCLUDES LOWER MORTGAGE PAYMENTS FOR UNDERWATER HOMEOWNERS

More from the Emeritus Newsroom- As part of a court settlement announced this morning, the Bank of America will pay more than $1 billion resolve its claims and those against Countrywide Financial Corporation and certain Countrywide subsidiaries and affiliates (Countrywide) for underwriting and origination mortgage fraud.

According to Loretta E. Lynch, United States Attorney for the Eastern District of New York, the settlement will entail an immediate payment of $500 million to provide a recovery for the harm done to the FHA by Countrywide's conduct. Payment of the second $500 million will be deferred to fund a loan modification program for Countrywide borrowers across the nation with underwater mortgages, which by some estimates includes more than 200,000 homeowners. Under the terms of the program, Bank of America will solicit all potentially eligible borrowers and provide a loan modification to anyone with an eligible mortgage who accepts the offer. If, after the expiration of three years, the bank has not met its obligation to apply the full $500 million to provide such relief, any remainder will be paid directly to the United States.

"We announce today the largest ever False Claims Act settlement relating to mortgage fraud. Through their underwriting and origination of tens of thousands of government-insured loans to unqualified borrowers, Countrywide Financial subsidiaries systematically abused the Federal Housing Administration and became some of the main players in this country's financial crisis. We are committed to protecting the FHA's ability to provide assistance to qualified low income and first-time home-buyers, and this settlement goes a long way toward that end. It also puts lenders on notice that they will face serious financial consequences for violating their obligations under the FHA's programs," stated United States Attorney Lynch.

Full text of District Attorney press release, click here. 03/09/2012

$450 MILLION SPENT SO FAR TO RECOVER 8.1 BILLION FROM BERNIE MADOFF SCANDAL

More from the Emeritus Newsroom- According to a report from the Government Accountability Office (GAO), as of October 2011, costs of the Madoff liquidation reached more than $450 million, and the Trustee estimates the total costs will exceed $1 billion by 2014. Legal costs, which include costs for the Trustee and the trustee’s counsel, are the largest category. While the estimated total cost for the Madoff liquidation is double the total for all completed SIPC cases to date, the Trustee, SIPC, and SEC note that the costs reflect the unprecedented size, duration, and complexity of the Madoff fraud. SIPC senior management also said the liquidation costs are justified, as litigation the trustee has pursued has produced $8.7 billion in recoveries for customers to date. Through various reports, court filings, and a website, the Trustee has disclosed information about the status of the liquidation. SIPC senior management, SEC officials, and the U.S. Bankruptcy Court have concluded that the Trustee’s disclosures sufficiently address the requirements for disclosure under the Bankruptcy Code and the Securities Investor Protection Act.

With the collapse of Bernard L. Madoff Investment Securities, LLC—a broker-dealer and investment advisory firm with thousands of clients—Bernard Madoff admitted to reporting $57.2 billion in fictitious customer holdings. The Securities Investor Protection Corporation (SIPC), which oversees a fund providing up to $500,000 of protection to qualifying individual customers of failed securities firms, selected a trustee to liquidate the Madoff firm and recover assets for its investors. The method the Trustee is using to determine how much a customer filing a claim could be eligible to recover—an amount known as “net equity”—has been the subject of dispute and litigation. This report discusses (1) how the Trustee and trustee’s counsel were selected, (2) why the method for valuing customer claims was chosen, (3) costs of the liquidation, and (4) disclosures the Trustee has made about its progress. GAO examined the Securities Investor Protection Act; court filings and decisions; and SIPC, Securities and Exchange Commission (SEC), and Trustee reports and records. GAO analyzed cost filings and interviewed SIPC, SEC, and SEC Inspector General officials, and the Trustee and his counsel.

Full text of GAO report, click here. 03/08/2012

VIDEO: THE GOOD AND THE BAD ABOUT REVERSE MORTGAGES

Click here for YouTube playback of video from AARP - 03/08/2012

OBAMA ANNOUNCES HOME LOAN HELP FOR MILITARY FAMILIES / ALSO HELPS HOMEOWNERS WITH F-H-A BACKED MORTGAGES

More from the Emeritus Newsroom- More programs were announced today by President Obama to help troubled homeowners, including those in the military who have lost their homes.

During an afternoon news conference Obama outlined the new proposals, which were summarized in a White House statement.

1)Reducing Fees for FHA Borrowers Seeking to Refinance: The FHA will cut its fees for refinancing loans already insured by the FHA. An estimated 2-3 million borrowers could be eligible for this savings, providing the typical FHA borrower with the opportunity to save about a thousand dollars a year through refinancing than they could have under today’s fee structure.

• Consider a typical FHA borrower with $175,000 outstanding on their mortgage. Currently, if this borrower refinanced into a 4% loan, they could reduce their monthly payments to nearly $1,010 a month, including both the upfront and monthly mortgage insurance premiums.

• With lower mortgage insurance premiums, this borrower could reduce their total monthly payments to about $915 per month. That means nearly $100 in additional savingsper month for an FHA borrower – on top of the savings they would receive from refinancing to a lower interest rate.

2) Compensating Servicemembers Wrongfully Foreclosed Upon: Servicers will conduct a review – overseen by the Department of Justice’s Civil Rights Division – of the files of every servicemember foreclosed upon since 2006 to determine whether any were foreclosed on in violation of the Servicemembers Civil Relief Act (SCRA). Servicers will compensate those who were with a payment equal to whichever of the following sums is higher:

* the servicemember’s lost equity, plus interest, and an additional $116,785; or

* an amount provided for the same violation as a result of a review conducted by the banking regulators. 

3)  Providing Relief for Servicemembers Forced to Sell Their Home at a Loss Due to a Permanent Change in Station:  Under the Department of Defense’s Homeowners’ Assistance Program (HAP), some servicemembers who are forced to sell their home at a loss due to a Permanent Change in Station (PCS) may be compensated for the loss in their home’s value. Under this settlement, servicers will provide short sale agreements and deficiency waivers to those servicemembers who were forced to sell their home for less than they owe on their mortgage due to a PCS, but who are not eligible for HAP. This means that the benefits of that program will finally be extended to servicemembers who bought their homes between July 1, 2006 and December 31, 2008, or who received a PCS after October 1, 2010.

4) $10 Million for the Veterans Housing Benefit Program. Under the settlement, servicers will pay $10 million into the Veterans Housing Benefit Program Fund, through which the Department of Veterans Affairs guarantees loans provided on favorable terms to eligible veterans.

Foreclosure Protections for Servicemembers Receiving Hostile Fire/Imminent Danger Pay.  The SCRA prohibits servicers from foreclosing on active duty servicemembers without first securing a court order, but only if their loan was secured when they were not on active duty. The settlement extends this protection to all servicemembers, regardless of when their mortgage was secured, who within nine months of the foreclosure received Hostile Fire/Imminent Danger Pay and were stationed away from their home.

Any Servicemember who believes his or her rights were violated by Bank of America, J.P. Morgan Chase, Ally, Citi, or Wells Fargo can contact the Justice Department directly at 1-800-896-7743.  The Department will have access to information to determine whether or not servicemembers are victims and the settlement requires those individuals to be contacted.

• Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance office.    For the relevant contact information, please consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator.   

• Additional information about the Justice Department's enforcement of the SCRA and the other laws protecting servicemembers is available at www.servicemembers.gov.

FULL TEXT OF WHITE HOUSE STATEMENT SUMMARIZING PRESIDENT OBAMA'S PROPOSALS, CLICK HERE. 03/06/2012

VIDEO: STATUS OF U-S ECONOMY - VOICE OF AMERICA REPORT (3 MINUTES) 02/29/2012

CASE SHILLER INDEX SHOWS HOME VALUES REACH NEW LOWS / FED HOUSING EXPERT SEES LITTLE IMPROVEMENT WITH HIGH UNEMPLOYMENT, TIGHT CREDIT

More from the Emeritus Newsroom- Data through December 2011, released today by S&P Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended 2011 at new index lows. The national composite fell by 3.8% during the fourth quarter of 2011 and was down 4.0% versus the fourth quarter of 2010. Both the 10- and 20-City Composites fell by 1.1`% in December over November, and posted annual returns of -3.9% and -4.0% versus December 2010, respectively. These are worse than the -3.8% respective annual rates both reported for November. With these latest data, all three composites are at their lowest levels since the housing crisis began in mid-2006.
In addition to both Composites, 18 of the 20 MSAs saw monthly declines in December over November. Miami and Phoenix were up 0.2% and 0.8%, respectively. At -12.8% Atlanta continued to post the lowest annual return. Detroit was the only city to post a positive annual return, +0.5% in December versus the same month in 2010. In addition to the three composites, Atlanta, Las Vegas, Seattle and Tampa each saw average home prices hit new lows. The graph below shows the staggering values over the last six months.

“In terms of prices, the housing market ended 2011 on a very disappointing note,” says David M. Blitzer,
Chairman of the Index Committee at S&P Indices. “With this month’s report we saw all three composite hit new record lows. While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended".

Blitzer added,

“After a prior three years of accelerated decline, the past two years has been a story of a housing market that is bottoming out but has not yet stabilized. Up until today’s report we had believed the crisis lows for the composites were behind us, with the 10-City Composite originally hitting a low in April 2009 and the 20- City Composite in March 2011. Now it looks like neither was the case, as both hit new record lows in December 2011. The National Composite fell by 3.8% in the fourth quarter alone, and is down 33.8% from its 2nd quarter 2006 peak. It also recorded a new record low. In general, most of the regions also posted weak data in December. Eighteen of the cities saw average home prices fall in December over November. Seventeen of the cities have seen monthly declines for at least three consecutive months. In addition to both monthly composites, 10 of the cities saw home prices
fall by more than 1.0% during the month of December. The pick-up in the economy has simply not been
strong enough to keep home prices stabilized. If anything it looks like we might have reentered a period of decline as we begin 2012".

Earlier today, Federal Reserve Governor Elizabeth Duke told the Senate Banking Committee that the extraordinary fall in national house prices has resulted in $7 trillion in lost home equity, more than half the amount that prevailed in early 2006.

Duke explained, "This substantial blow to household wealth has significantly weakened household spending and consumer confidence. Another result of the fall in house prices is that around 12 million households are now underwater on their mortgages--that is, they owe more on their mortgages than their homes are worth. Without equity in their homes, many households who have experienced hardships, such as unemployment or unexpected illness, have been unable to resolve mortgage payment problems through refinancing their mortgages or selling their homes. The resulting mortgage delinquencies have ended in all too many cases in foreclosure, dislocation, and personal adversity. Neighborhoods and communities have also suffered profoundly from the onslaught of foreclosures, as the neglect and deterioration that may accompany vacant properties makes neighborhoods less desirable places to live and may put further downward pressure on house prices".

Case Shiller press release, click here. Federal Reserve Governor Duke statement to Senate Banking Committee, click here - 02/28/2012

DESPITE DROPPING HOME VALUES, HOUSING COSTS CONTINUE TO RISE

More from the Emeritus Newsroom- A new study by the Center for Housing Policy confirms that falling home prices have not solved the housing affordability problems of the nation’s working households.  In fact, the Center’s Housing Landscape 2012 report found that the share of working households paying more than half their income for housing rose significantly between 2008 and 2010 for both renters and owners. This annual report explores the latest Census data from 2008 to 2010 on housing costs and income, including housing cost burden data from the 50 largest U.S. metropolitan areas, all 50 states and the District of Columbia. Among other conclusions, Housing Landscape 2012 finds that nearly one in four working households in the U.S. spends more than half of total income on housing.

Housing cost burden for working households grew over the two-year period studied largely due to falling incomes and rising rental housing costs. Report author Laura Williams says rents rose due to increased demand for rental housing which has outstripped supply, partly due to the crisis on the home ownership side of the market.

“More and more people are interested in renting,” Williams remarked.
“Some prefer it because it allows them to be more mobile in a tough job market. Others are postponing purchasing a home or facing difficulties obtaining a mortgage. Given the long lead times involved in responding to increased demand with increased supply, the rental market has tightened somewhat and rents increased.”

For working homeowners over the same two-year period, incomes slid more than twice as much as housing costs. In fact, incomes for working homeowners fell even more sharply than they did for working renters. Jeffrey Lubell, executive director of the Washington-based Center for Housing Policy, said this phenomenon was primarily due to a drop in average hours worked among moderate-income homeowners.

Key National Findings

State and Local Findings

Between 2008 and 2010, the share of working households with a severe housing cost burden increased significantly in 24 states and decreased significantly in only one state: Maine. Eight other states that saw no significant increase in the percentage of such households already had steadily high rates of severe housing cost burden.

Among the 50 states and the District of Columbia, the following five had the highest share of working households with a severe housing cost burden in 2010:

California                            34%
Florida                                 33%
New Jersey                         32%
Hawaii                                 30%
Nevada                               29%

CONGRESSIONAL BUDGET OFFICE SAYS STIMULUS ACT CONTINUES TO WORK

More from the Emeritus Newsroom- The American Recovery and Reinvestment Act stimulus from 2009 and 2010 continue to have effects through 2012. According to the Congressional Budget Office, ARRA’s policies had the following effects in the fourth quarter of calendar year 2011 compared with what would have occurred otherwise:

• They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.2 percent and 1.5 percent,

• They lowered the unemployment rate by between 0.2 percentage points and 1.1 percentage points,

• They increased the number of people employed by between 0.3 million and 2.0 million, and

• They increased the number of full-time-equivalent (FTE) jobs by 0.4 million to 2.6 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)

Those ranges reflect the substantial uncertainty that surrounds the broad economic effects of such policies and a range of economists’ views about the magnitude of those effects.

In contrast, recipients of some ARRA funds reported that those sums supported about 200,000 FTE jobs during the fourth quarter of calendar year 2011. In CBO’s view, those reports do not provide a comprehensive estimate of the law’s impact on U.S. employment for several reasons, which are discussed in CBO’s report and in a previous CBO blog post.

The CBO predicts for 2012, ARRA will:

• Raise real GDP by between 0.1 percent and 0.8 percent, and

• Increase the number of FTE jobs by between 0.2 million and 1.3 million.

Full text of CBO statement, click here. 02/22/2012

FEDERAL RESERVE EXTENDS DEADLINE FOR HOMEOWNERS WANTING INDEPENDENT REVIEW OF THEIR FORECLOSURES

More from the Emeritus Newsroom- The Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (Federal Reserve) today announced that the deadline for submitting requests for review under the Independent Foreclosure Review has been extended. The new deadline, July 31, 2012, provides an additional three months for borrowers to request a review if they believe they suffered financial injury as a result of errors in foreclosure actions on their homes in 2009 or 2010 by one of the servicers covered by enforcement actions issued in April 2011.

The deadline extension provides more time to increase awareness of how eligible people may request a review through the Independent Foreclosure Review process and to encourage the broadest participation possible.

As part of enforcement actions issued in April 2011, the OCC, Federal Reserve, and the Office of Thrift Supervision required 14 large mortgage servicers to retain independent consultants to conduct a comprehensive review of foreclosure activity in 2009 and 2010 to identify borrowers who may have been financially injured due to errors, misrepresentations, or other deficiencies in the foreclosure process. If the review finds that financial injury occurred, the borrower may receive compensation or other remedy.

Borrowers are eligible for an Independent Foreclosure Review if they meet the following basic criteria:

Participating mortgage servicers include: America's Servicing Company, Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, Everbank/Everhome Mortgage Company, Financial Freedom, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, U.S. Bank, Wachovia Mortgage; Washington Mutual, Wells Fargo; and Wilshire Credit Corporation.

There are no costs associated with being included in the review. For more information, borrowers can call 888-952-9105, Monday through Friday, 8 a.m.-10 p.m. ET or Saturday, 8 a.m.-5 p.m. ET or visit www.federalreserve.gov/consumerinfo/independent-foreclosure-review.htm or www.occ.gov/independent.

The National Consumer Law Center believes the review process gives too much power to mortgage servicers. NCLC Attorney Alys Cohen testified before a U.S. Senate Banking, Housing and Urban Affairs subcommittee on December 13, 2011. Cohen told the committee, “The foreclosure review process as proposed by the Office of the Comptroller of the Currency is opaque, leaves too much control in the hands of the mortgage servicers—the firms that created the mess in the first place—and threatens to strip further rights from homeowners,” asserted Cohen during her testimony. Due to the OCC’s history of siding with banks over consumers and the potential for homeowner injury, the National Consumer Law Center recommends that the Consumer Financial Protection Bureau take over implementation of the process". Full text of NCLC press release, click here.

Full text of Federal Reserve press release, click here - 02/15/2012

DID THE STIMULUS WORK - CENTER FOR AMERICAN PROGRESS (4 MINUTES)

MUST READ: WHY FEDERAL SAFETY NET CRITICS DEPEND ON IT

More in this article from the New York Times, click here - Charts and graphics showing increasing dependency on government safety net, click here. 02/12/2012

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